Question 1

Explain the relationship between price elasticity of demand and total revenue.

Accepted Answer

If demand is elastic,an increase in pric

Question 2

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 per cent.However,your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

Accepted Answer

A)  Boutique hotel rooms are inferior goods. 
B)  Demand is inelastic. 
C)  The demand curve for your hotel rooms is vertical. 
D)  Demand is elastic. 
A)  Boutique hotel rooms are inferior goods. 
B)  Demand is inelastic. 
C)  The demand curve for your hotel rooms is vertical. 
D)  Demand is elastic.

Question 3

The most important determinant of the price elasticity of demand for a good is

Accepted Answer

A)  the definition of the market for a good. 
B)  the availability of substitutes for the good. 
C)  the share of the good in the consumer's budget. 
D)  whether the good is a necessity or a luxury. 
A)  the definition of the market for a good. 
B)  the availability of substitutes for the good. 
C)  the share of the good in the consumer's budget. 
D)  whether the good is a necessity or a luxury.

Question 4

Seth is a competitive body builder.He says he has to have his 12-gram package of protein powder to 'feed his muscles' every day.On the basis of this information,what can you conclude about his price elasticity of demand for protein powder?

Accepted Answer

A)  It is elastic. 
B)  It is perfectly elastic. 
C)  It is perfectly inelastic. 
D)  The price elasticity coefficient is 0. 
A)  It is elastic. 
B)  It is perfectly elastic. 
C)  It is perfectly inelastic. 
D)  The price elasticity coefficient is 0.

Question 5

A perfectly elastic demand curve is

Accepted Answer

A)  vertical. 
B)  horizontal. 
C)  curvilinear. 
D)  upward sloping. 
A)  vertical. 
B)  horizontal. 
C)  curvilinear. 
D)  upward sloping.

Question 6

Economists use the concept of ________ to measure how one economic variable,such as quantity,responds to a change in another economic variable,such as price.

Accepted Answer

A)  slope 
B)  efficiency 
C)  relativity 
D)  elasticity 
A)  slope 
B)  efficiency 
C)  relativity 
D)  elasticity

Question 7

If the demand for mobile phone service is inelastic,then

Accepted Answer

A)  the percentage change in quantity demanded is greater than the percentage change in price (in absolute value). 
B)  the percentage change in quantity demanded is equal to the percentage change in price. 
C)  the quantity demanded does not change in response to changes in price. 
D)  the percentage change in quantity demanded is less than the percentage change in price (in absolute value). 
A)  the percentage change in quantity demanded is greater than the percentage change in price (in absolute value). 
B)  the percentage change in quantity demanded is equal to the percentage change in price. 
C)  the quantity demanded does not change in response to changes in price. 
D)  the percentage change in quantity demanded is less than the percentage change in price (in absolute value).

Question 8

At a price of $8 per dozen,Chuy sells 40 dozen homemade tamales per week.When he raised his price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is

Accepted Answer

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

Question 9

There is a limited number of original Picasso paintings.This means that the supply of original Picasso paintings is perfectly inelastic.

Accepted Answer

A) True 
 B)False

Question 10

A demand curve that is horizontal indicates that the commodity

Accepted Answer

A)  has few substitutes. 
B)  must be very cheap. 
C)  is a necessity. 
D)  has a large number of substitutes. 
A)  has few substitutes. 
B)  must be very cheap. 
C)  is a necessity. 
D)  has a large number of substitutes.

Question 11

If demand for a product is perfectly inelastic,a change in price will not change total revenue.

Accepted Answer

A) True 
 B)False

Question 12

Suppose you are considering buying stock in the stock market,and your objective is to maximise your net worth.Furthermore,your study of the market reveals that the economy will be slowing down over the next several months.Under these conditions,it would be best to purchase stock in companies that produce

Accepted Answer

A)  normal goods. 
B)  luxury goods. 
C)  inferior goods. 
D)  price elastic goods. 
A)  normal goods. 
B)  luxury goods. 
C)  inferior goods. 
D)  price elastic goods.

Question 13

If a firm wanted to know whether the demand for its product was elastic,unit-elastic,or inelastic,then the firm could

Accepted Answer

A)  survey competitors and ask them what they think demand elasticity is for the product. 
B)  talk to its customers. 
C)  change the price a little bit and observe what happens to total revenue. 
D)  not do anything as there is no way to find an elasticity value. 
A)  survey competitors and ask them what they think demand elasticity is for the product. 
B)  talk to its customers. 
C)  change the price a little bit and observe what happens to total revenue. 
D)  not do anything as there is no way to find an elasticity value.

Question 14

If the demand for a steak is unit-elastic,then

Accepted Answer

A)  the percentage change in quantity demanded is 1 per cent greater than the percentage change in price. 
B)  the percentage change in quantity demanded is equal to the percentage change in price. 
C)  the percentage change in quantity demanded is 100 per cent greater than the percentage change in price (in absolute value). 
D)  quantity demanded does not respond to changes in price. 
A)  the percentage change in quantity demanded is 1 per cent greater than the percentage change in price. 
B)  the percentage change in quantity demanded is equal to the percentage change in price. 
C)  the percentage change in quantity demanded is 100 per cent greater than the percentage change in price (in absolute value). 
D)  quantity demanded does not respond to changes in price.

Question 15

The demand for all carbonated beverages is likely to be ________ the demand for Pepsi.

Accepted Answer

A)  more elastic than 
B)  perfectly elastic compared to 
C)  less elastic than 
D)  perfectly inelastic compared to 
A)  more elastic than 
B)  perfectly elastic compared to 
C)  less elastic than 
D)  perfectly inelastic compared to

Question 16

Which of the following statements about the price elasticity of demand is correct?

Accepted Answer

A)  The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. 
B)  The absolute value of the elasticity of demand ranges from zero to one. 
C)  Demand is more elastic in the long run than it is in the short run. 
D)  Demand is more elastic the smaller the percentage of the consumer's budget the item takes up. 
A)  The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. 
B)  The absolute value of the elasticity of demand ranges from zero to one. 
C)  Demand is more elastic in the long run than it is in the short run. 
D)  Demand is more elastic the smaller the percentage of the consumer's budget the item takes up.

Question 17

The price elasticity of supply is equal to

Accepted Answer

A)  the value of the slope of the supply curve. 
B)  the change in quantity supplied divided by the change in price. 
C)  the percentage change in price divided by the percentage change in quantity supplied. 
D)  the percentage change in quantity supplied divided by the percentage change in price. 
A)  the value of the slope of the supply curve. 
B)  the change in quantity supplied divided by the change in price. 
C)  the percentage change in price divided by the percentage change in quantity supplied. 
D)  the percentage change in quantity supplied divided by the percentage change in price.

Question 18

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

Accepted Answer

A) True 
 B)False

Question 19

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be

Accepted Answer

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

Question 20

Consider the following pairs of items: 
a.shampoo and conditioner
b.iPhones and earbuds
c.a laptop computer and a desktop computer
d.beef and pork
e.air-travel and weed killer
Which of the pairs listed will have a negative cross-price elasticity?

Accepted Answer

A)  a and b only 
B)  c and d only 
C)  e only 
D)  a, b and c only 
A)  a and b only 
B)  c and d only 
C)  e only 
D)  a, b and c only

Explain the relationship between price elasticity of demand and total revenue.

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 per cent.However,your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

The most important determinant of the price elasticity of demand for a good is

Seth is a competitive body builder.He says he has to have his 12-gram package of protein powder to 'feed his muscles' every day.On the basis of this information,what can you conclude about his price elasticity of demand for protein powder?

A perfectly elastic demand curve is

Economists use the concept of ________ to measure how one economic variable,such as quantity,responds to a change in another economic variable,such as price.

If the demand for mobile phone service is inelastic,then

At a price of $8 per dozen,Chuy sells 40 dozen homemade tamales per week.When he raised his price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is

There is a limited number of original Picasso paintings.This means that the supply of original Picasso paintings is perfectly inelastic.

A demand curve that is horizontal indicates that the commodity

If demand for a product is perfectly inelastic,a change in price will not change total revenue.

If a firm wanted to know whether the demand for its product was elastic,unit-elastic,or inelastic,then the firm could

If the demand for a steak is unit-elastic,then

The demand for all carbonated beverages is likely to be ________ the demand for Pepsi.

Which of the following statements about the price elasticity of demand is correct?

The price elasticity of supply is equal to

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be

Consider the following pairs of items: a.shampoo and conditioner b.iPhones and earbuds c.a laptop computer and a desktop computer d.beef and pork e.air-travel and weed killer Which of the pairs listed will have a negative cross-price elasticity?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 4: Market Efficiency and Market Failure

Explain the relationship between price elasticity of demand and total revenue.

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 per cent.However,your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

The most important determinant of the price elasticity of demand for a good is

Seth is a competitive body builder.He says he has to have his 12-gram package of protein powder to 'feed his muscles' every day.On the basis of this information,what can you conclude about his price elasticity of demand for protein powder?

A perfectly elastic demand curve is

Economists use the concept of ________ to measure how one economic variable,such as quantity,responds to a change in another economic variable,such as price.

If the demand for mobile phone service is inelastic,then

At a price of $8 per dozen,Chuy sells 40 dozen homemade tamales per week.When he raised his price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is

There is a limited number of original Picasso paintings.This means that the supply of original Picasso paintings is perfectly inelastic.

A demand curve that is horizontal indicates that the commodity

If demand for a product is perfectly inelastic,a change in price will not change total revenue.

If a firm wanted to know whether the demand for its product was elastic,unit-elastic,or inelastic,then the firm could

If the demand for a steak is unit-elastic,then

The demand for all carbonated beverages is likely to be ________ the demand for Pepsi.

Which of the following statements about the price elasticity of demand is correct?

The price elasticity of supply is equal to

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be

Consider the following pairs of items: a.shampoo and conditioner b.iPhones and earbuds c.a laptop computer and a desktop computer d.beef and pork e.air-travel and weed killer Which of the pairs listed will have a negative cross-price elasticity?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters