Question 1

If the cross elasticity of demand between peanut butter and jelly is negative,then

Accepted Answer

A) a rise in the price of peanut butter results in a rise in the equilibrium price of jelly. 
B) a rise in the price of peanut butter results in a fall in the equilibrium price of jelly. 
C) a rise in the price of peanut butter has no effect on the equilibrium price of jelly. 
D) a fall in the price of peanut butter results in a fall in the equilibrium price of jelly. 
E) peanut butter and jelly are substitutes. 
A) a rise in the price of peanut butter results in a rise in the equilibrium price of jelly. 
B) a rise in the price of peanut butter results in a fall in the equilibrium price of jelly. 
C) a rise in the price of peanut butter has no effect on the equilibrium price of jelly. 
D) a fall in the price of peanut butter results in a fall in the equilibrium price of jelly. 
E) peanut butter and jelly are substitutes.

Question 2

Supply is elastic if

Accepted Answer

A) a small percentage change in price results in a large percentage change in quantity supplied. 
B) a large percentage change in price results in a small percentage change in quantity supplied. 
C) a small percentage change in demand results in a large percentage change in quantity supplied. 
D) the good is an inferior good. 
E) the good is a normal good. 
A) a small percentage change in price results in a large percentage change in quantity supplied. 
B) a large percentage change in price results in a small percentage change in quantity supplied. 
C) a small percentage change in demand results in a large percentage change in quantity supplied. 
D) the good is an inferior good. 
E) the good is a normal good.

Question 3

Suppose a university decides to raise tuition fees to increase the total revenue it receives from students.This policy works only if the demand for a university education

Accepted Answer

A) is unit elastic. 
B) is inelastic. 
C) is elastic. 
D) has a price elasticity greater than 1. 
E) is perfectly elastic. 
A) is unit elastic. 
B) is inelastic. 
C) is elastic. 
D) has a price elasticity greater than 1. 
E) is perfectly elastic.

Question 4

Suppose the quantity of gasoline is measured in litres and the price of gasoline is measured in dollars.The price elasticity of demand is 0.67.If the price of gasoline is then measured in cents rather than in dollars,the price elasticity of demand would be

Accepted Answer

A) 6.7. 
B) 67.0. 
C) 0.67. 
D) 0.0067. 
E) negative. 
A) 6.7. 
B) 67.0. 
C) 0.67. 
D) 0.0067. 
E) negative.

Question 5

If an increase in the supply of good A decreases the demand for good B,then

Accepted Answer

A) the cross elasticity of supply for good B with respect to the price of good A is negative. 
B) the elasticity of supply for good A is greater than 1. 
C) A and B are complements. 
D) A and B are substitutes. 
E) the demand for A is price elastic. 
A) the cross elasticity of supply for good B with respect to the price of good A is negative. 
B) the elasticity of supply for good A is greater than 1. 
C) A and B are complements. 
D) A and B are substitutes. 
E) the demand for A is price elastic.

Question 6

A sudden,end-of-summer heat wave increases the demand for air conditioners and catches suppliers with no reserve inventories.The momentary supply for air conditioners is

Accepted Answer

A) perfectly elastic. 
B) perfectly inelastic. 
C) elastic. 
D) shown by an upward-sloping curve. 
E) shown by a horizontal curve. 
A) perfectly elastic. 
B) perfectly inelastic. 
C) elastic. 
D) shown by an upward-sloping curve. 
E) shown by a horizontal curve.

Question 7

Suppose a fall from $110 to $90 in the price of playing golf on a public golf course increases the quantity of golf balls demanded from 9,950 units to 10,050 units.The cross elasticity of demand of playing golf with respect to the price of golf balls is

Accepted Answer

A) -0.05. 
B) -0.1. 
C) 0.01. 
D) 20.0. 
E) 0.05. 
A) -0.05. 
B) -0.1. 
C) 0.01. 
D) 20.0. 
E) 0.05.

Question 8

Fred's income increases from $840 per week to $1,160 per week.As a result,he decides to purchase 24 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is

Accepted Answer

A) 0.32. 
B) 1.33. 
C) 24. 
D) 0.24. 
E) 0.75. 
A) 0.32. 
B) 1.33. 
C) 24. 
D) 0.24. 
E) 0.75.

Question 9

Which one of the following is true if demand is income elastic?

Accepted Answer

A) The percentage change in income is greater than the percentage change in quantity demanded. 
B) The percentage change in income is smaller than the percentage change in quantity demanded. 
C) An increase in income decreases demand. 
D) The good is an inferior good. 
E) A rise in price increases the quantity demanded. 
A) The percentage change in income is greater than the percentage change in quantity demanded. 
B) The percentage change in income is smaller than the percentage change in quantity demanded. 
C) An increase in income decreases demand. 
D) The good is an inferior good. 
E) A rise in price increases the quantity demanded.

Question 10

The price of a bus ride rises by 3 percent and quantity of oranges demanded decreases by 3 percent.The demand for bus rides is

Accepted Answer

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

Question 11

When the quantity of coal is measured in kilograms instead of pounds,the demand for coal becomes

Accepted Answer

A) more elastic. 
B) less elastic. 
C) neither more nor less elastic. 
D) perfectly elastic. 
E) perfectly inelastic. 
A) more elastic. 
B) less elastic. 
C) neither more nor less elastic. 
D) perfectly elastic. 
E) perfectly inelastic.

Question 12

The price of good A falls by 10 percent and quantity of good A demanded does not change.The demand for good A is

Accepted Answer

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

Question 13

As a result of a poor growing season,the supply of apples decreases and total revenue falls.The demand for apples is

Accepted Answer

A) perfectly inelastic. 
B) elastic. 
C) inelastic. 
D) unit elastic. 
E) either elastic or unit elastic. 
A) perfectly inelastic. 
B) elastic. 
C) inelastic. 
D) unit elastic. 
E) either elastic or unit elastic.

Question 14

The elasticity of supply is a units-free measure of the responsiveness of the

Accepted Answer

A) quantity demanded to a change in supply. 
B) quantity supplied to a change in demand. 
C) quantity supplied to a change in price. 
D) price of one good to a change in the quantity supplied of a second good. 
E) quantity supplied of one good to a change in the price of another good. 
A) quantity demanded to a change in supply. 
B) quantity supplied to a change in demand. 
C) quantity supplied to a change in price. 
D) price of one good to a change in the quantity supplied of a second good. 
E) quantity supplied of one good to a change in the price of another good.

Question 15

The demand for a good is perfectly elastic when the price elasticity of demand is

Accepted Answer

A) equal to infinity. 
B) between infinity and 1. 
C) equal to 1. 
D) between 1 and zero. 
E) equal to zero. 
A) equal to infinity. 
B) between infinity and 1. 
C) equal to 1. 
D) between 1 and zero. 
E) equal to zero.

Question 16

If the quantity of chicken demanded increases by 1.25 percent when the price of beef increases by 2.5 percent,the cross elasticity of demand between chicken and beef is

Accepted Answer

A) 3.125. 
B) -3.125. 
C) -0.5. 
D) 2.0. 
E) 0.5. 
A) 3.125. 
B) -3.125. 
C) -0.5. 
D) 2.0. 
E) 0.5.

Question 17

If good A is a complement of good B,then the cross elasticity of demand for good B with respect to the price of good A is

Accepted Answer

A) equal to 1. 
B) equal to the cross elasticity of demand for good A with respect to the price of good B. 
C) positive. 
D) zero. 
E) negative. 
A) equal to 1. 
B) equal to the cross elasticity of demand for good A with respect to the price of good B. 
C) positive. 
D) zero. 
E) negative.

Question 18

Goods that can be produced using rare productive resources have a ________ elasticity of supply.The greater the amount of time available after a price change,the ________ is the elasticity of supply.

Accepted Answer

A) low;smaller 
B) high;greater 
C) high;smaller 
D) low;greater 
E) high;more inelastic 
A) low;smaller 
B) high;greater 
C) high;smaller 
D) low;greater 
E) high;more inelastic

Question 19

A vertical supply curve

Accepted Answer

A) is impossible except in the long run. 
B) implies an elasticity of supply equal to zero. 
C) implies an elasticity of supply equal to infinity. 
D) indicates that suppliers are unwilling to produce the good. 
E) indicates a shortage of the good. 
A) is impossible except in the long run. 
B) implies an elasticity of supply equal to zero. 
C) implies an elasticity of supply equal to infinity. 
D) indicates that suppliers are unwilling to produce the good. 
E) indicates a shortage of the good.

Question 20

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is

Accepted Answer

A) 2.5. 
B) 0.8. 
C) 0.4. 
D) 1.2. 
E) 2.0. 
A) 2.5. 
B) 0.8. 
C) 0.4. 
D) 1.2. 
E) 2.0.

If the cross elasticity of demand between peanut butter and jelly is negative,then

Supply is elastic if

Suppose a university decides to raise tuition fees to increase the total revenue it receives from students.This policy works only if the demand for a university education

Suppose the quantity of gasoline is measured in litres and the price of gasoline is measured in dollars.The price elasticity of demand is 0.67.If the price of gasoline is then measured in cents rather than in dollars,the price elasticity of demand would be

If an increase in the supply of good A decreases the demand for good B,then

A sudden,end-of-summer heat wave increases the demand for air conditioners and catches suppliers with no reserve inventories.The momentary supply for air conditioners is

Suppose a fall from $110 to $90 in the price of playing golf on a public golf course increases the quantity of golf balls demanded from 9,950 units to 10,050 units.The cross elasticity of demand of playing golf with respect to the price of golf balls is

Fred's income increases from $840 per week to $1,160 per week.As a result,he decides to purchase 24 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is

Which one of the following is true if demand is income elastic?

The price of a bus ride rises by 3 percent and quantity of oranges demanded decreases by 3 percent.The demand for bus rides is

When the quantity of coal is measured in kilograms instead of pounds,the demand for coal becomes

The price of good A falls by 10 percent and quantity of good A demanded does not change.The demand for good A is

As a result of a poor growing season,the supply of apples decreases and total revenue falls.The demand for apples is

The elasticity of supply is a units-free measure of the responsiveness of the

The demand for a good is perfectly elastic when the price elasticity of demand is

If the quantity of chicken demanded increases by 1.25 percent when the price of beef increases by 2.5 percent,the cross elasticity of demand between chicken and beef is

If good A is a complement of good B,then the cross elasticity of demand for good B with respect to the price of good A is

Goods that can be produced using rare productive resources have a elasticity of supply.The greater the amount of time available after a price change,the is the elasticity of supply.

A vertical supply curve

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 4: Elasticity

If the cross elasticity of demand between peanut butter and jelly is negative,then

Supply is elastic if

Suppose a university decides to raise tuition fees to increase the total revenue it receives from students.This policy works only if the demand for a university education

Suppose the quantity of gasoline is measured in litres and the price of gasoline is measured in dollars.The price elasticity of demand is 0.67.If the price of gasoline is then measured in cents rather than in dollars,the price elasticity of demand would be

If an increase in the supply of good A decreases the demand for good B,then

A sudden,end-of-summer heat wave increases the demand for air conditioners and catches suppliers with no reserve inventories.The momentary supply for air conditioners is

Suppose a fall from $110 to $90 in the price of playing golf on a public golf course increases the quantity of golf balls demanded from 9,950 units to 10,050 units.The cross elasticity of demand of playing golf with respect to the price of golf balls is

Fred's income increases from $840 per week to $1,160 per week.As a result,he decides to purchase 24 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is

Which one of the following is true if demand is income elastic?

The price of a bus ride rises by 3 percent and quantity of oranges demanded decreases by 3 percent.The demand for bus rides is

When the quantity of coal is measured in kilograms instead of pounds,the demand for coal becomes

The price of good A falls by 10 percent and quantity of good A demanded does not change.The demand for good A is

As a result of a poor growing season,the supply of apples decreases and total revenue falls.The demand for apples is

The elasticity of supply is a units-free measure of the responsiveness of the

The demand for a good is perfectly elastic when the price elasticity of demand is

If the quantity of chicken demanded increases by 1.25 percent when the price of beef increases by 2.5 percent,the cross elasticity of demand between chicken and beef is

If good A is a complement of good B,then the cross elasticity of demand for good B with respect to the price of good A is

Goods that can be produced using rare productive resources have a ________ elasticity of supply.The greater the amount of time available after a price change,the ________ is the elasticity of supply.

A vertical supply curve

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Goods that can be produced using rare productive resources have a elasticity of supply.The greater the amount of time available after a price change,the is the elasticity of supply.