Question 1

The quantity demanded increases from 20 to 30 units as the price falls from 50 to 40.What is the price elasticity of demand using the arc (or midpoint) method?

Accepted Answer

A) -1/5 
B) -9 
C) -1/2 
D) -9/5 
E) None D

Question 2

Which statement is true?

Accepted Answer

A) The cross-price elasticity of demand for two substitute products is zero. 
B) The cross-price elasticity of demand for two substitute products is negative. 
C) The cross-price elasticity of demand for two substitute products is positive. 
D) Either a or B C

Question 3

A company that supplies water to a city faces a market demand curve of P = 150 - 2q.At what price does the company maximize total revenue?

Accepted Answer

A) P = 75 
B) P = 150 
C) P = 50 
D) P = 100 
E) None of the above. A

Question 4

A company that supplies water to a city faces a market demand curve of P = 240 - 3q.At what quantity does the company maximize total revenue?

Accepted Answer

A) q = 20 
B) q = 40 
C) q = 60 
D) q = 80 
E) None of the above

Question 5

If the quantity supplied increases from 100 to 150 if the price rises from 5 to 10, what is the price elasticity of supply according to the arc (or midpoint) method?

Accepted Answer

A) 1/5 
B) 2/5 
C) 3/5 
D) 1 
E) None of the above

Question 6

Consider a market with a demand curve of P = 150 - q and a supply curve of P = 2q.What is the price elasticity of demand at the market equilibrium?

Accepted Answer

A) -1/2 
B) -1 
C) -3/2 
D) -2 
E) None of the above

Question 7

If an increase in income by 15 per cent results in a 45 per cent increase in the quantity demanded, what is the income elastic of the good?

Accepted Answer

A) 3/2 
B) 3 
C) 1/2 
D) 1/3 
E) None of the above

Question 8

What is the price elasticity of supply if the supply curve is given by P = 2q?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
E) None of the above

Question 9

Which statement is true?

Accepted Answer

A) The price elasticity of demand is constant along a straight-line demand curve. 
B) The price elasticity of demand varies along a straight-line demand curve. 
C) Given slope is constant, the price elasticity of demand is constant along a straight-line demand curve. 
D) a and c 
E) None of the above.

Question 10

Consider a market with a demand curve of P = 150 - q and a supply curve of P = 2q.What is the price elasticity of supply at the market equilibrium?

Accepted Answer

A) 1/2 
B) 1 
C) 3/2 
D) 2 
E) None of the above

Exam 10: Elasticity

The quantity demanded increases from 20 to 30 units as the price falls from 50 to 40.What is the price elasticity of demand using the arc (or midpoint) method?

Which statement is true?

A company that supplies water to a city faces a market demand curve of P = 150 - 2q.At what price does the company maximize total revenue?

A company that supplies water to a city faces a market demand curve of P = 240 - 3q.At what quantity does the company maximize total revenue?

If the quantity supplied increases from 100 to 150 if the price rises from 5 to 10, what is the price elasticity of supply according to the arc (or midpoint) method?

Consider a market with a demand curve of P = 150 - q and a supply curve of P = 2q.What is the price elasticity of demand at the market equilibrium?

If an increase in income by 15 per cent results in a 45 per cent increase in the quantity demanded, what is the income elastic of the good?

What is the price elasticity of supply if the supply curve is given by P = 2q?

Which statement is true?

Consider a market with a demand curve of P = 150 - q and a supply curve of P = 2q.What is the price elasticity of supply at the market equilibrium?