Question 1

The demand for corn increases.As a result,the price of corn ________,and the less elastic the supply of corn,the ________ will be the effect on the price.

Accepted Answer

A) falls;smaller 
B) falls;greater 
C) rises;smaller 
D) rises;greater 
E) None of the above because the change in the price is effected by the price elasticity of demand. 
A) falls;smaller 
B) falls;greater 
C) rises;smaller 
D) rises;greater 
E) None of the above because the change in the price is effected by the price elasticity of demand.

Question 2

If the price elasticity of demand is 2,then a 1 percent fall in price

Accepted Answer

A) doubles the quantity demanded. 
B) decreases the quantity demanded by half. 
C) increases the quantity demanded by 2 percent. 
D) decreases the quantity demanded by 2 percent. 
E) increases the quantity demanded by 0.5 percent. 
A) doubles the quantity demanded. 
B) decreases the quantity demanded by half. 
C) increases the quantity demanded by 2 percent. 
D) decreases the quantity demanded by 2 percent. 
E) increases the quantity demanded by 0.5 percent.

Question 3

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded,

Accepted Answer

A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit elastic. 
D) the price elasticity of demand is close to infinity. 
E) the price elasticity of demand is zero. 
A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit elastic. 
D) the price elasticity of demand is close to infinity. 
E) the price elasticity of demand is zero.

Question 4

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 5

The price of good A falls by 10 percent and quantity of good A demanded does not change.We conclude that 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 6

When the price elasticity of demand is ________,demand for the good is unit elastic.

Accepted Answer

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

Question 7

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 8

The demand for a good will be more price inelastic,

Accepted Answer

A) the higher is its price. 
B) the larger is the percentage of income spent on it. 
C) the longer is the passage of time. 
D) the smaller the supply of the good. 
E) the fewer substitutes are available for the good. 
A) the higher is its price. 
B) the larger is the percentage of income spent on it. 
C) the longer is the passage of time. 
D) the smaller the supply of the good. 
E) the fewer substitutes are available for the good.

Question 9

Business people speak about income elasticity of demand without using the actual term.Which one of the following statements reflects income elasticity of demand?

Accepted Answer

A) "A price cut won't help me.It won't increase sales, and I'll just get less money for each unit." 
B) "I don't think a price cut will make any difference to my bottom line.What I may gain from selling more I would lose on the lower price." 
C) "My customers are real bargain hunters.Since I set my prices just a few cents below my competitors, customers have flocked to the store and sales are booming." 
D) "With the recent economic recovery, people have more income to spend and sales are booming, even at the previous prices." 
E) both A and B 
A) "A price cut won't help me.It won't increase sales, and I'll just get less money for each unit." 
B) "I don't think a price cut will make any difference to my bottom line.What I may gain from selling more I would lose on the lower price." 
C) "My customers are real bargain hunters.Since I set my prices just a few cents below my competitors, customers have flocked to the store and sales are booming." 
D) "With the recent economic recovery, people have more income to spend and sales are booming, even at the previous prices." 
E) both A and B

Question 10

The price of plums falls by 7 percent and quantity of plums demanded increases by 6.75 percent.We conclude that the demand for plums is

Accepted Answer

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

Question 11

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded,the demand curve for this good

Accepted Answer

A) is vertical. 
B) is horizontal. 
C) has slope equal to 1. 
D) is a straight line with slope equal to 10. 
E) none of the above. 
A) is vertical. 
B) is horizontal. 
C) has slope equal to 1. 
D) is a straight line with slope equal to 10. 
E) none of the above.

Question 12

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

Accepted Answer

A) A large percentage increase in income will result in a small percentage increase in quantity demanded. 
B) A small percentage increase in income will result in a large percentage increase in quantity demanded. 
C) An increase in income will decrease the quantity demanded. 
D) The good is an inferior good. 
E) A percentage change in price will lead to a larger percentage change in quantity demanded. 
A) A large percentage increase in income will result in a small percentage increase in quantity demanded. 
B) A small percentage increase in income will result in a large percentage increase in quantity demanded. 
C) An increase in income will decrease the quantity demanded. 
D) The good is an inferior good. 
E) A percentage change in price will lead to a larger percentage change in quantity demanded.

Question 13

Suppose a rise in the price of a good from $6.50 to $7.50 leads to a decrease in the quantity demanded from 10,500 to 9,500 units.In this range of demand,the price elasticity of demand is

Accepted Answer

A) 14. 
B) 7. 
C) 1,000. 
D) 1. 
E) 0.7. 
A) 14. 
B) 7. 
C) 1,000. 
D) 1. 
E) 0.7.

Question 14

Which of the following will have the most elastic demand?

Accepted Answer

A) frozen desserts 
B) ice cream 
C) strawberry ice cream 
D) a banana split made with strawberry and chocolate ice cream 
E) a banana split with with Nestle strawberry and chocolate ice cream 
A) frozen desserts 
B) ice cream 
C) strawberry ice cream 
D) a banana split made with strawberry and chocolate ice cream 
E) a banana split with with Nestle strawberry and chocolate ice cream

Question 15

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.5,the company must

Accepted Answer

A) raise the price of a computer by 1.714 percent. 
B) raise the price of a computer by 0.21 percent. 
C) lower the price of a computer by 0.21 percent. 
D) lower the price of a computer by 1.714 percent. 
E) lower the price of a computer by 0.58 percent. 
A) raise the price of a computer by 1.714 percent. 
B) raise the price of a computer by 0.21 percent. 
C) lower the price of a computer by 0.21 percent. 
D) lower the price of a computer by 1.714 percent. 
E) lower the price of a computer by 0.58 percent.

Question 16

A negative value for

Accepted Answer

A) price elasticity of supply implies an upward-sloping supply curve. 
B) cross elasticity of demand implies that the goods are complements. 
C) price elasticity of demand implies an inferior good. 
D) income elasticity of demand implies a normal good. 
E) income elasticity of demand implies an error in your calculation. 
A) price elasticity of supply implies an upward-sloping supply curve. 
B) cross elasticity of demand implies that the goods are complements. 
C) price elasticity of demand implies an inferior good. 
D) income elasticity of demand implies a normal good. 
E) income elasticity of demand implies an error in your calculation.

Question 17

Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent.Such a price rise will induce consumers to spend

Accepted Answer

A) more of their income on bison. 
B) the same amount of their income on bison as before. 
C) less of their income on bison. 
D) more on products that are complements of bison. 
E) zero dollars on bison meat. 
A) more of their income on bison. 
B) the same amount of their income on bison as before. 
C) less of their income on bison. 
D) more on products that are complements of bison. 
E) zero dollars on bison meat.

Question 18

If the demand for good Z is perfectly inelastic,then the demand curve for good Z is

Accepted Answer

A) vertical. 
B) horizontal. 
C) upward sloping. 
D) downward sloping. 
E) initially upward sloping and then downward sloping. 
A) vertical. 
B) horizontal. 
C) upward sloping. 
D) downward sloping. 
E) initially upward sloping and then downward sloping.

Question 19

Use the table below to answer the following questions.
Table 4.1.1
Demand schedule for good A.
  
-Refer to Table 4.1.1.If the price of good A falls from $4 to $3,

Accepted Answer

A) total revenue will increase. 
B) total revenue will remain constant. 
C) demand is elastic in this range. 
D) demand is unit elastic in this range. 
E) demand is inelastic in this range. 
A) total revenue will increase. 
B) total revenue will remain constant. 
C) demand is elastic in this range. 
D) demand is unit elastic in this range. 
E) demand is inelastic in this range.

Question 20

If the demand curve for a good is a horizontal line,then the good has

Accepted Answer

A) zero income elasticity. 
B) price elasticity of demand equal to zero. 
C) infinite price elasticity of demand. 
D) a price elasticity of demand that is likely to rise in the short run. 
E) a price elasticity of demand that is likely to fall in the short run. 
A) zero income elasticity. 
B) price elasticity of demand equal to zero. 
C) infinite price elasticity of demand. 
D) a price elasticity of demand that is likely to rise in the short run. 
E) a price elasticity of demand that is likely to fall in the short run.

Exam 4: Elasticity

The demand for corn increases.As a result,the price of corn ________,and the less elastic the supply of corn,the ________ will be the effect on the price.

If the price elasticity of demand is 2,then a 1 percent fall in price

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded,

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

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

When the price elasticity of demand is ________,demand for the good is unit elastic.

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.

The demand for a good will be more price inelastic,

Business people speak about income elasticity of demand without using the actual term.Which one of the following statements reflects income elasticity of demand?

The price of plums falls by 7 percent and quantity of plums demanded increases by 6.75 percent.We conclude that the demand for plums is

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded,the demand curve for this good

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

Suppose a rise in the price of a good from $6.50 to $7.50 leads to a decrease in the quantity demanded from 10,500 to 9,500 units.In this range of demand,the price elasticity of demand is

Which of the following will have the most elastic demand?

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.5,the company must

A negative value for

Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent.Such a price rise will induce consumers to spend

If the demand for good Z is perfectly inelastic,then the demand curve for good Z is

Use the table below to answer the following questions. Table 4.1.1 Demand schedule for good A. -Refer to Table 4.1.1.If the price of good A falls from $4 to $3,

If the demand curve for a good is a horizontal line,then the good has

What Is Economics?

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Global Markets in Action

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Possibilities, Preferences, and Choices

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Economic Inequality

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Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

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The demand for corn increases.As a result,the price of corn ,and the less elastic the supply of corn,the will be the effect on the price.

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.