Question 1

-Refer to the information above to answer this question.Which of the following statements is correct?

Accepted Answer

A) Demand is inelastic between the prices of $1 and $5. 
B) Demand is inelastic between the prices of $4 and $7. 
C) Demand is inelastic between the prices of $6 and $10. 
D) No comment on elasticity can be made from the above information. 
A) Demand is inelastic between the prices of $1 and $5. 
B) Demand is inelastic between the prices of $4 and $7. 
C) Demand is inelastic between the prices of $6 and $10. 
D) No comment on elasticity can be made from the above information.

Question 2

-Refer to the graphs above to answer this question.Suppose that the price of nuts decreases from P1 to P2 and the demand curve for chocolates shifts to the right from D1 to D2.What can be said about the cross-elasticity of demand for nuts and chocolates and their relationship?

Accepted Answer

A) The cross-elasticity of demand coefficient between nuts and chocolates is negative and nuts and chocolates are substitutes. 
B) The cross-elasticity of demand coefficient between nuts and chocolates is negative and nuts and chocolates are complements. 
C) The cross-elasticity of demand coefficient between nuts and chocolates is positive and nuts and chocolates are complements. 
D) The cross-elasticity of demand coefficient between nuts and chocolates is positive and nuts and chocolates are substitutes. 
A) The cross-elasticity of demand coefficient between nuts and chocolates is negative and nuts and chocolates are substitutes. 
B) The cross-elasticity of demand coefficient between nuts and chocolates is negative and nuts and chocolates are complements. 
C) The cross-elasticity of demand coefficient between nuts and chocolates is positive and nuts and chocolates are complements. 
D) The cross-elasticity of demand coefficient between nuts and chocolates is positive and nuts and chocolates are substitutes.

Question 3

All of the following statements except one are correct concerning a product which has an elastic demand.Which is the exception?

Accepted Answer

A) Any relative change in price is greater than the relative change in quantity. 
B) Buyers are relatively sensitive to price changes. 
C) The elasticity coefficient is greater than one. 
D) Total revenue rises if price decreases. 
A) Any relative change in price is greater than the relative change in quantity. 
B) Buyers are relatively sensitive to price changes. 
C) The elasticity coefficient is greater than one. 
D) Total revenue rises if price decreases.

Question 4

-If a product has few substitutes,which of the following statements is correct?

Accepted Answer

A) It is likely that its income elasticity is high. 
B) It is likely that it is an inferior product. 
C) It is likely that its supply elasticity is high. 
D) It is likely that its price elasticity of demand is low. 
A) It is likely that its income elasticity is high. 
B) It is likely that it is an inferior product. 
C) It is likely that its supply elasticity is high. 
D) It is likely that its price elasticity of demand is low.

Question 5

"A linear demand curve implies constant elasticity." Evaluate this statement.

Accepted Answer

This statement is incorrect.As you move

Question 6

-Refer to the information above to answer this question.At what price is the seller's total revenue maximized?

Accepted Answer

A) $1. 
B) $10. 
C) $5 or $6. 
D) $4 or $7. 
E) $5. 
A) $1. 
B) $10. 
C) $5 or $6. 
D) $4 or $7. 
E) $5.

Question 7

What is the term for the responsiveness of the change in the quantity demanded of product A to a change in the price of product B?

Accepted Answer

A) Income elasticity. 
B) Cross elasticity of demand. 
C) Price elasticity of demand. 
D) Supply elasticity. 
A) Income elasticity. 
B) Cross elasticity of demand. 
C) Price elasticity of demand. 
D) Supply elasticity.

Question 8

-Refer to the graph above to answer this question.Which of the following statements is correct?

Accepted Answer

A) Demand curve D2 is the inelastic portion of a curve that could be extended upward to the left. 
B) Demand curve D1 is the elastic portion of a curve that could be extended upward to the left. 
C) Demand curve D2 is more elastic than D1. 
D) Demand curve D2 is perfectly inelastic. 
A) Demand curve D2 is the inelastic portion of a curve that could be extended upward to the left. 
B) Demand curve D1 is the elastic portion of a curve that could be extended upward to the left. 
C) Demand curve D2 is more elastic than D1. 
D) Demand curve D2 is perfectly inelastic.

Question 9

George is an art collector and he owns three Van Gogh paintings.George decides to destroy one of them.Explain why?

Accepted Answer

The supply of Van Gogh paintings is perf

Question 10

If the elasticity of demand is unitary and the price rises,then total revenue will rise.

Accepted Answer

A) True 
 B)False

Question 11

-Refer to the graph above to answer this question.Which of the following statements is correct?

Accepted Answer

A) The demand curve in I is perfectly elastic. 
B) The demand curve is II is unitary elastic. 
C) The demand curve in III is perfectly inelastic. 
D) The demand curve in I is unitary elastic. 
A) The demand curve in I is perfectly elastic. 
B) The demand curve is II is unitary elastic. 
C) The demand curve in III is perfectly inelastic. 
D) The demand curve in I is unitary elastic.

Question 12

Why might a good harvest be bad news for farmers?

Accepted Answer

A) Because the demand for many basic agricultural products is very inelastic. 
B) Because the demand for many basic agricultural products is very elastic. 
C) Because prices would likely rise. 
D) Because much of the crop would spoil due to the lack of sales. 
A) Because the demand for many basic agricultural products is very inelastic. 
B) Because the demand for many basic agricultural products is very elastic. 
C) Because prices would likely rise. 
D) Because much of the crop would spoil due to the lack of sales.

Question 13

-Refer to the information above to answer this question.What is the elasticity of demand in the $16 to $20 range?

Accepted Answer

A) 0.02. 
B) 0.7. 
C) 1.4. 
D) 1. 
E) 2.1. 
A) 0.02. 
B) 0.7. 
C) 1.4. 
D) 1. 
E) 2.1.

Question 14

-Refer to the information above to answer this question.Over what price range is demand elastic?

Accepted Answer

A) $14 to $16. 
B) $14 to $20. 
C) $16 to $18. 
D) $16 to $20. 
E) $18 to $22. 
A) $14 to $16. 
B) $14 to $20. 
C) $16 to $18. 
D) $16 to $20. 
E) $18 to $22.

Question 15

What measures the responsiveness of quantity demanded to a change in price?

Accepted Answer

A) Total revenue. 
B) Equilibrium price. 
C) Price elasticity of demand. 
D) Income elasticity. 
E) Inelasticity. 
A) Total revenue. 
B) Equilibrium price. 
C) Price elasticity of demand. 
D) Income elasticity. 
E) Inelasticity.

Question 16

Below is some information on the demand for products K,L and M.
  
-Refer to the information above to answer this question.What is the income elasticity of product K?

Accepted Answer

A) 0.15. 
B) 15. 
C) approximately 14. 
D) approximately 1.4. 
E) approximately 0.7. 
A) 0.15. 
B) 15. 
C) approximately 14. 
D) approximately 1.4. 
E) approximately 0.7.

Question 17

The graph below illustrates three demand curves.
  
-Refer to the graph above to answer this question.Between the price range of $50 and $60,which of the three demand curves is the most elastic?

Accepted Answer

A) D1. 
B) D2. 
C) D3. 
D) Cannot be determined. 
A) D1. 
B) D2. 
C) D3. 
D) Cannot be determined.

Question 18

Which of the two following pairs of product categories are income inelastic?

Accepted Answer

A) Food and shelter. 
B) Furniture and clothing. 
C) Recreation and restaurant meals. 
D) Education and textbooks. 
A) Food and shelter. 
B) Furniture and clothing. 
C) Recreation and restaurant meals. 
D) Education and textbooks.

Question 19

Below is some information on the demand for products K,L and M.
  
-Refer to the information above to answer this question.Which of the following is correct about product M?

Accepted Answer

A) It has an income elasticity of approximately 6.7. 
B) It has an income elasticity of approximately 0.2. 
C) It has an income elasticity of approximately 0.6. 
D) It is a normal good. 
E) It is an inferior good. 
A) It has an income elasticity of approximately 6.7. 
B) It has an income elasticity of approximately 0.2. 
C) It has an income elasticity of approximately 0.6. 
D) It is a normal good. 
E) It is an inferior good.

Question 20

Suppose the demand curve is perfectly inelastic and the equilibrium price is $8 and equilibrium quantity is 9.If the government impose an excise tax of $1 per unit,what will be the new price and quantity traded? What is the total tax revenue and who pays the tax?

Accepted Answer

P = $9
Q = 9
Tax rev

-Refer to the information above to answer this question.Which of the following statements is correct?

-Refer to the graphs above to answer this question.Suppose that the price of nuts decreases from P₁ to P₂ and the demand curve for chocolates shifts to the right from D₁ to D₂.What can be said about the cross-elasticity of demand for nuts and chocolates and their relationship?

All of the following statements except one are correct concerning a product which has an elastic demand.Which is the exception?

-If a product has few substitutes,which of the following statements is correct?

"A linear demand curve implies constant elasticity." Evaluate this statement.

-Refer to the information above to answer this question.At what price is the seller's total revenue maximized?

What is the term for the responsiveness of the change in the quantity demanded of product A to a change in the price of product B?

-Refer to the graph above to answer this question.Which of the following statements is correct?

George is an art collector and he owns three Van Gogh paintings.George decides to destroy one of them.Explain why?

If the elasticity of demand is unitary and the price rises,then total revenue will rise.

-Refer to the graph above to answer this question.Which of the following statements is correct?

Why might a good harvest be bad news for farmers?

-Refer to the information above to answer this question.What is the elasticity of demand in the $16 to $20 range?

-Refer to the information above to answer this question.Over what price range is demand elastic?

What measures the responsiveness of quantity demanded to a change in price?

Below is some information on the demand for products K,L and M. -Refer to the information above to answer this question.What is the income elasticity of product K?

The graph below illustrates three demand curves. -Refer to the graph above to answer this question.Between the price range of $50 and $60,which of the three demand curves is the most elastic?

Which of the two following pairs of product categories are income inelastic?

Below is some information on the demand for products K,L and M. -Refer to the information above to answer this question.Which of the following is correct about product M?

Suppose the demand curve is perfectly inelastic and the equilibrium price is $8 and equilibrium quantity is 9.If the government impose an excise tax of $1 per unit,what will be the new price and quantity traded? What is the total tax revenue and who pays the tax?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

Exam 4: Elasticity

-Refer to the information above to answer this question.Which of the following statements is correct?

-Refer to the graphs above to answer this question.Suppose that the price of nuts decreases from P1 to P2 and the demand curve for chocolates shifts to the right from D1 to D2.What can be said about the cross-elasticity of demand for nuts and chocolates and their relationship?

All of the following statements except one are correct concerning a product which has an elastic demand.Which is the exception?

-If a product has few substitutes,which of the following statements is correct?

"A linear demand curve implies constant elasticity." Evaluate this statement.

-Refer to the information above to answer this question.At what price is the seller's total revenue maximized?

What is the term for the responsiveness of the change in the quantity demanded of product A to a change in the price of product B?

-Refer to the graph above to answer this question.Which of the following statements is correct?

George is an art collector and he owns three Van Gogh paintings.George decides to destroy one of them.Explain why?

If the elasticity of demand is unitary and the price rises,then total revenue will rise.

-Refer to the graph above to answer this question.Which of the following statements is correct?

Why might a good harvest be bad news for farmers?

-Refer to the information above to answer this question.What is the elasticity of demand in the $16 to $20 range?

-Refer to the information above to answer this question.Over what price range is demand elastic?

What measures the responsiveness of quantity demanded to a change in price?

Below is some information on the demand for products K,L and M. -Refer to the information above to answer this question.What is the income elasticity of product K?

The graph below illustrates three demand curves. -Refer to the graph above to answer this question.Between the price range of $50 and $60,which of the three demand curves is the most elastic?

Which of the two following pairs of product categories are income inelastic?

Below is some information on the demand for products K,L and M. -Refer to the information above to answer this question.Which of the following is correct about product M?

Suppose the demand curve is perfectly inelastic and the equilibrium price is $8 and equilibrium quantity is 9.If the government impose an excise tax of $1 per unit,what will be the new price and quantity traded? What is the total tax revenue and who pays the tax?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

-Refer to the graphs above to answer this question.Suppose that the price of nuts decreases from P₁ to P₂ and the demand curve for chocolates shifts to the right from D₁ to D₂.What can be said about the cross-elasticity of demand for nuts and chocolates and their relationship?