Question 1

If the price of oil goes up by 50 % and the quantity demanded goes down by 25%,the absolute value of the price elasticity of demand is

Accepted Answer

A) 0.25. 
B) 0.50. 
C) 0.75. 
D) 1.00. 
A) 0.25. 
B) 0.50. 
C) 0.75. 
D) 1.00. B

Question 2

-In the above figure,through which range would the demand for this good be most inelastic?

Accepted Answer

A) A-B 
B) B-E 
C) E-F 
D) G-H 
A) A-B 
B) B-E 
C) E-F 
D) G-H D

Question 3

When two goods are substitutes,

Accepted Answer

A) the demands for both goods will be inelastic. 
B) cross price elasticity of demand will be 0. 
C) cross price elasticity of demand will be negative. 
D) cross price elasticity of demand will be positive. 
A) the demands for both goods will be inelastic. 
B) cross price elasticity of demand will be 0. 
C) cross price elasticity of demand will be negative. 
D) cross price elasticity of demand will be positive. D

Question 4

A measure of the responsiveness of demand to changes in income,all other things being constant,is

Accepted Answer

A) income elasticity of demand. 
B) price income elasticity of demand. 
C) price elasticity of demand. 
D) cross price elasticity of demand. 
A) income elasticity of demand. 
B) price income elasticity of demand. 
C) price elasticity of demand. 
D) cross price elasticity of demand.

Question 5

If there is no response in quantity demanded to a change in price,demand is

Accepted Answer

A) perfectly inelastic. 
B) perfectly elastic. 
C) elastic. 
D) unit-elastic. 
A) perfectly inelastic. 
B) perfectly elastic. 
C) elastic. 
D) unit-elastic.

Question 6

A perfectly elastic demand curve

Accepted Answer

A) shows that a slight change in income will lead to a large reduction in price. 
B) is a horizontal line drawn across from the quantity axis. 
C) shows that a slight increase in price will reduce quantity demanded to zero. 
D) has a slope of -1. 
A) shows that a slight change in income will lead to a large reduction in price. 
B) is a horizontal line drawn across from the quantity axis. 
C) shows that a slight increase in price will reduce quantity demanded to zero. 
D) has a slope of -1.

Question 7

For which of the following purchases would the absolute price elasticity of demand be smallest?

Accepted Answer

A) A sports car 
B) Utilities 
C) Chewing gum 
D) A cell phone 
A) A sports car 
B) Utilities 
C) Chewing gum 
D) A cell phone

Question 8

Price elasticities are calculated for four goods,and the values are: 4.1; 3.7; 1.0; 0.002.Which price elasticity is most elastic?

Accepted Answer

A) 4.1 
B) 3.7 
C) 1.0 
D) 0.002 
A) 4.1 
B) 3.7 
C) 1.0 
D) 0.002

Question 9

The range to the right of the midpoint on a linear demand curve is

Accepted Answer

A) elastic. 
B) infinite. 
C) one. 
D) inelastic. 
A) elastic. 
B) infinite. 
C) one. 
D) inelastic.

Question 10

Suppose that when the price of good X changes,the quantity of good Y demanded remains the same.The cross price elasticity of demand is

Accepted Answer

A) zero. 
B) positive. 
C) negative. 
D) either positive or negative. 
A) zero. 
B) positive. 
C) negative. 
D) either positive or negative.

Question 11

The cross price elasticity between X and Y is -1.8.We can conclude that

Accepted Answer

A) goods X and Y are substitutes. 
B) goods X and Y are complements. 
C) goods X and Y are unrelated. 
D) perfect substitutes 
A) goods X and Y are substitutes. 
B) goods X and Y are complements. 
C) goods X and Y are unrelated. 
D) perfect substitutes

Question 12

When the price of a pound of apples is $1.00,7500 pounds of apples are demanded.When the price of a pound of apples decreases to $0.80,10,000 pounds of apples are demanded.In this price range the demand for apples is

Accepted Answer

A) elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly elastic. 
A) elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly elastic.

Question 13

An 18 percent increase in the price of small cars results in a 10 percent expansion in the quantity supplied.The supply elasticity in this range equals ________.

Accepted Answer

A) 9/5 
B) 5/9 
C) 7/10 
D) 4/10 
A) 9/5 
B) 5/9 
C) 7/10 
D) 4/10

Question 14

When demand is elastic,

Accepted Answer

A) a proportionately small change in price leads to a proportionately large change in quantity supplied. 
B) a proportionately small change in price leads to a proportionately small change in quantity supplied. 
C) a proportionately small change in price leads to a proportionately large change in quantity demanded. 
D) a proportionately small change in price leads to a proportionately small change in quantity demanded. 
A) a proportionately small change in price leads to a proportionately large change in quantity supplied. 
B) a proportionately small change in price leads to a proportionately small change in quantity supplied. 
C) a proportionately small change in price leads to a proportionately large change in quantity demanded. 
D) a proportionately small change in price leads to a proportionately small change in quantity demanded.

Question 15

If the cross price elasticity of demand between two commodities is positive,then these commodities are

Accepted Answer

A) are superior. 
B) are complements. 
C) are substitutes. 
D) are inferior. 
A) are superior. 
B) are complements. 
C) are substitutes. 
D) are inferior.

Question 16

Income elasticity of demand is defined as

Accepted Answer

A) the change in income divided by the change in quantity. 
B) the change in price divided by the change in income. 
C) the percentage change in demand divided by the percentage change in income. 
D) the change in income multiplied by the change in quantity. 
A) the change in income divided by the change in quantity. 
B) the change in price divided by the change in income. 
C) the percentage change in demand divided by the percentage change in income. 
D) the change in income multiplied by the change in quantity.

Question 17

If the price of good X increases by 1 percent,then the quantity supplied increases by more than 1 percent.This means

Accepted Answer

A) supply is elastic. 
B) supply is unit-elastic. 
C) supply is inelastic. 
D) the good has good substitutes. 
A) supply is elastic. 
B) supply is unit-elastic. 
C) supply is inelastic. 
D) the good has good substitutes.

Question 18

The absolute price elasticity of demand for a vertical demand curve

Accepted Answer

A) is infinite. 
B) is 1.0. 
C) is 0. 
D) depends on where one is on the demand curve. 
A) is infinite. 
B) is 1.0. 
C) is 0. 
D) depends on where one is on the demand curve.

Question 19

If demand for Rolls Royce automobiles rises in an area where incomes have increased,this tells us that a Rolls Royce is

Accepted Answer

A) a normal good. 
B) an inferior good. 
C) a complementary good. 
D) a substitute good. 
A) a normal good. 
B) an inferior good. 
C) a complementary good. 
D) a substitute good.

Question 20

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Price } \
\text { Per Unit }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { Per Week }
\end{array} \
\hline \$ 5.5 & 20 \
\$ 6.0 & 18 \
\$ 6.5 & 16 \
\$ 7.0 & 14 \
\$ 7.5 & 12 \
\$ 8.0 & 10
\end{array}$$
-According to the above table,what is the absolute price elasticity of demand when price rises from $5.50 to $6?

Accepted Answer

A) 4.00 
B) 2.23 
C) 1.21 
D) 0.50 
A) 4.00 
B) 2.23 
C) 1.21 
D) 0.50

Exam 6: Demand and Supply Elasticity

If the price of oil goes up by 50 % and the quantity demanded goes down by 25%,the absolute value of the price elasticity of demand is

-In the above figure,through which range would the demand for this good be most inelastic?

When two goods are substitutes,

A measure of the responsiveness of demand to changes in income,all other things being constant,is

If there is no response in quantity demanded to a change in price,demand is

A perfectly elastic demand curve

For which of the following purchases would the absolute price elasticity of demand be smallest?

Price elasticities are calculated for four goods,and the values are: 4.1; 3.7; 1.0; 0.002.Which price elasticity is most elastic?

The range to the right of the midpoint on a linear demand curve is

Suppose that when the price of good X changes,the quantity of good Y demanded remains the same.The cross price elasticity of demand is

The cross price elasticity between X and Y is -1.8.We can conclude that

When the price of a pound of apples is $1.00,7500 pounds of apples are demanded.When the price of a pound of apples decreases to $0.80,10,000 pounds of apples are demanded.In this price range the demand for apples is

An 18 percent increase in the price of small cars results in a 10 percent expansion in the quantity supplied.The supply elasticity in this range equals ________.

When demand is elastic,

If the cross price elasticity of demand between two commodities is positive,then these commodities are

Income elasticity of demand is defined as

If the price of good X increases by 1 percent,then the quantity supplied increases by more than 1 percent.This means

The absolute price elasticity of demand for a vertical demand curve

If demand for Rolls Royce automobiles rises in an area where incomes have increased,this tells us that a Rolls Royce is

Price Per Unit Quantity Demanded Per Week \ 5.5 20 \ 6.0 18 \ 6.5 16 \ 7.0 14 \ 7.5 12 \ 8.0 10 -According to the above table,what is the absolute price elasticity of demand when price rises from $5.50 to $6?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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