Question 1

Along a downward-sloping,linear demand curve,total revenue is the greatest

Accepted Answer

A)  where demand is normal. 
B)  where demand is the most inelastic. 
C)  where demand is the most elastic. 
D)  where demand is unit-elastic. 
A)  where demand is normal. 
B)  where demand is the most inelastic. 
C)  where demand is the most elastic. 
D)  where demand is unit-elastic.

Question 2

Total revenue equals

Accepted Answer

A)  price per unit times quantity sold. 
B)  price per unit times quantity supplied. 
C)  price per unit times the change in quantity sold. 
D)  change in price per unit times quantity sold. 
A)  price per unit times quantity sold. 
B)  price per unit times quantity supplied. 
C)  price per unit times the change in quantity sold. 
D)  change in price per unit times quantity sold.

Question 3

Consider the following types of demand curves: 
a.a vertical demand curve
b.a horizontal demand curve
c.a linear downward-sloping demand curve
Which of the demand curves listed exhibits a price elasticity of demand coefficient that remains constant along the demand curve?

Accepted Answer

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

Question 4

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

Accepted Answer

A) True 
 B)False

Question 5

If the cross-price elasticity of demand for computers and software is negative,this means the two goods are

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  inferior. 
D)  normal. 
A)  substitutes. 
B)  complements. 
C)  inferior. 
D)  normal.

Question 6

Studies show that the income elasticity of demand for wine is approximately five.What does this mean?

Accepted Answer

A)  A 1 per cent decrease in the price of wine leads to a 5 per cent increase in wine consumption. 
B)  A 1 per cent increase in income leads to a 5 per cent increase in wine consumption. 
C)  A 5 per cent increase in income leads to a 1 per cent increase in wine consumption. 
D)  Wine is a relatively elastic good. 
A)  A 1 per cent decrease in the price of wine leads to a 5 per cent increase in wine consumption. 
B)  A 1 per cent increase in income leads to a 5 per cent increase in wine consumption. 
C)  A 5 per cent increase in income leads to a 1 per cent increase in wine consumption. 
D)  Wine is a relatively elastic good.

Question 7

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

Accepted Answer

A)  The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope. 
B)  If quantity demanded changes by a larger percentage than the percentage change in price, demand is elastic. 
C)  The value of the price elasticity of demand along a downward-sloping demand curve is always negative. 
D)  A linear downward-sloping demand curve has a varying price elasticity coefficient. 
A)  The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope. 
B)  If quantity demanded changes by a larger percentage than the percentage change in price, demand is elastic. 
C)  The value of the price elasticity of demand along a downward-sloping demand curve is always negative. 
D)  A linear downward-sloping demand curve has a varying price elasticity coefficient.

Question 8

Briefly explain the economic concept of elasticity.

Accepted Answer

Elasticity is a measure of how

Question 9

To calculate the price elasticity of demand we divide

Accepted Answer

A)  the percentage change in quantity demanded by the percentage change in price. 
B)  the percentage change in price by the percentage change in quantity demanded. 
C)  the rise by the run. 
D)  the average price by the average quantity demanded. 
A)  the percentage change in quantity demanded by the percentage change in price. 
B)  the percentage change in price by the percentage change in quantity demanded. 
C)  the rise by the run. 
D)  the average price by the average quantity demanded.

Question 10

The price elasticity of supply is usually a positive number because

Accepted Answer

A)  quantity supplied increases in response to income increases. 
B)  quantity supplied increases in response to price increases. 
C)  the quantity demanded usually rises when price falls, and therefore suppliers would want to capitalise on this increase in demand. 
D)  price rises when supply increases. 
A)  quantity supplied increases in response to income increases. 
B)  quantity supplied increases in response to price increases. 
C)  the quantity demanded usually rises when price falls, and therefore suppliers would want to capitalise on this increase in demand. 
D)  price rises when supply increases.

Question 11

Suppose a decrease in the supply of wheat results in an increase in revenue.This indicates that

Accepted Answer

A)  the decrease in quantity sold is proportionately larger than the resulting change in price. 
B)  the resulting increase in price is proportionately greater than the decrease in quantity sold. 
C)  the demand curve for wheat must be vertical. 
D)  the supply curve for wheat must be vertical. 
A)  the decrease in quantity sold is proportionately larger than the resulting change in price. 
B)  the resulting increase in price is proportionately greater than the decrease in quantity sold. 
C)  the demand curve for wheat must be vertical. 
D)  the supply curve for wheat must be vertical.

Question 12

If a 6 per cent increase in income leads to a 4 per cent increase in quantity demanded for audio books,the income elasticity of demand is

Accepted Answer

A)  -0.67. 
B)  0.67. 
C)  1.5. 
D)  2. 
A)  -0.67. 
B)  0.67. 
C)  1.5. 
D)  2.

Question 13

Which of the following is not a determinant of a good's price elasticity of demand?

Accepted Answer

A)  The slope of the demand curve 
B)  The share of the good in the consumer's total budget 
C)  Whether the good is a luxury or a necessity 
D)  The passage of time 
A)  The slope of the demand curve 
B)  The share of the good in the consumer's total budget 
C)  Whether the good is a luxury or a necessity 
D)  The passage of time

Question 14

If the market for a product is broadly defined,then

Accepted Answer

A)  the good has many complements. 
B)  there are few substitutes for the product, and the demand for the product is relatively inelastic. 
C)  there are many substitutes for the product, and the demand for the product is relatively elastic. 
D)  the expenditure on the good is likely to make up a large share of one's budget. 
A)  the good has many complements. 
B)  there are few substitutes for the product, and the demand for the product is relatively inelastic. 
C)  there are many substitutes for the product, and the demand for the product is relatively elastic. 
D)  the expenditure on the good is likely to make up a large share of one's budget.

Question 15

The price elasticity of demand for Stork ice cream is -4.Suppose you're told that,following a price increase,quantity demanded fell by 10 per cent.What was the percentage change in price that brought about this change in quantity demanded?

Accepted Answer

A)  40 per cent 
B)  25 per cent 
C)  2.5 per cent 
D)  0.4 per cent 
A)  40 per cent 
B)  25 per cent 
C)  2.5 per cent 
D)  0.4 per cent

Question 16

If the price elasticity of demand for insulin is equal to zero then the demand curve for insulin is

Accepted Answer

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

Question 17

Figure 4-7  
-Refer to Figure 4-7.What is the value of the price elasticity of supply between g and h?

Accepted Answer

A)  20 
B)  0.5 
C)  2 
D)  0.02 
A)  20 
B)  0.5 
C)  2 
D)  0.02

Question 18

Supply is elastic whenever the elasticity value for supply is positive and greater than 1.

Accepted Answer

A) True 
 B)False

Question 19

Assume that a 50 per cent petrol tax led to a large increase in its price and only a small decrease in the quantity of petrol demanded.Economic analysis would lead one to conclude that

Accepted Answer

A)  petrol should be taxed because the benefits of the tax would exceed the costs. 
B)  petrol should not be taxed because the benefits are uncertain. 
C)  petrol should not be taxed on ethical grounds since ethical benefits and costs can't be measured. 
D)  the benefit of taxing petrol is a normative issue. Economic analysis can be used to contribute to discussion of this issue but cannot decide it. 
A)  petrol should be taxed because the benefits of the tax would exceed the costs. 
B)  petrol should not be taxed because the benefits are uncertain. 
C)  petrol should not be taxed on ethical grounds since ethical benefits and costs can't be measured. 
D)  the benefit of taxing petrol is a normative issue. Economic analysis can be used to contribute to discussion of this issue but cannot decide it.

Question 20

Total revenue is equal to

Accepted Answer

A)  the amount of funds earned by a firm minus its costs of production. 
B)  the total quantity sold of a product over a given period of time. 
C)  the price of a product multiplied by the number of units of the product sold. 
D)  the monetary value of the capital (for example, plant and equipment) a firm owns. 
A)  the amount of funds earned by a firm minus its costs of production. 
B)  the total quantity sold of a product over a given period of time. 
C)  the price of a product multiplied by the number of units of the product sold. 
D)  the monetary value of the capital (for example, plant and equipment) a firm owns.

Along a downward-sloping,linear demand curve,total revenue is the greatest

Total revenue equals

Consider the following types of demand curves: a.a vertical demand curve b.a horizontal demand curve c.a linear downward-sloping demand curve Which of the demand curves listed exhibits a price elasticity of demand coefficient that remains constant along the demand curve?

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

If the cross-price elasticity of demand for computers and software is negative,this means the two goods are

Studies show that the income elasticity of demand for wine is approximately five.What does this mean?

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

Briefly explain the economic concept of elasticity.

To calculate the price elasticity of demand we divide

The price elasticity of supply is usually a positive number because

Suppose a decrease in the supply of wheat results in an increase in revenue.This indicates that

If a 6 per cent increase in income leads to a 4 per cent increase in quantity demanded for audio books,the income elasticity of demand is

Which of the following is not a determinant of a good's price elasticity of demand?

If the market for a product is broadly defined,then

The price elasticity of demand for Stork ice cream is -4.Suppose you're told that,following a price increase,quantity demanded fell by 10 per cent.What was the percentage change in price that brought about this change in quantity demanded?

If the price elasticity of demand for insulin is equal to zero then the demand curve for insulin is

Figure 4-7 -Refer to Figure 4-7.What is the value of the price elasticity of supply between g and h?

Supply is elastic whenever the elasticity value for supply is positive and greater than 1.

Assume that a 50 per cent petrol tax led to a large increase in its price and only a small decrease in the quantity of petrol demanded.Economic analysis would lead one to conclude that

Total revenue is equal to

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

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Exam 4: Market Efficiency and Market Failure

Along a downward-sloping,linear demand curve,total revenue is the greatest

Total revenue equals

Consider the following types of demand curves: a.a vertical demand curve b.a horizontal demand curve c.a linear downward-sloping demand curve Which of the demand curves listed exhibits a price elasticity of demand coefficient that remains constant along the demand curve?

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

If the cross-price elasticity of demand for computers and software is negative,this means the two goods are

Studies show that the income elasticity of demand for wine is approximately five.What does this mean?

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

Briefly explain the economic concept of elasticity.

To calculate the price elasticity of demand we divide

The price elasticity of supply is usually a positive number because

Suppose a decrease in the supply of wheat results in an increase in revenue.This indicates that

If a 6 per cent increase in income leads to a 4 per cent increase in quantity demanded for audio books,the income elasticity of demand is

Which of the following is not a determinant of a good's price elasticity of demand?

If the market for a product is broadly defined,then

The price elasticity of demand for Stork ice cream is -4.Suppose you're told that,following a price increase,quantity demanded fell by 10 per cent.What was the percentage change in price that brought about this change in quantity demanded?

If the price elasticity of demand for insulin is equal to zero then the demand curve for insulin is

Figure 4-7 -Refer to Figure 4-7.What is the value of the price elasticity of supply between g and h?

Supply is elastic whenever the elasticity value for supply is positive and greater than 1.

Assume that a 50 per cent petrol tax led to a large increase in its price and only a small decrease in the quantity of petrol demanded.Economic analysis would lead one to conclude that

Total revenue is equal to

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