Question 1

A demand curve which is ________ represents perfectly inelastic demand,and a demand curve which is ________ represents inelastic demand.

Accepted Answer

A)  downward sloping; vertical 
B)  horizontal; downward sloping 
C)  vertical; downward sloping 
D)  upward sloping; horizontal 
A)  downward sloping; vertical 
B)  horizontal; downward sloping 
C)  vertical; downward sloping 
D)  upward sloping; horizontal

Question 2

The price elasticity of demand is equal to

Accepted Answer

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

Question 3

Figure 4-3  
-Refer to Figure 4-3.At the midpoint of the demand curve,in absolute value

Accepted Answer

A)  the price elasticity coefficient is at a maximum. 
B)  the price elasticity coefficient is at a minimum. 
C)  the price elasticity coefficient is zero. 
D)  the price elasticity coefficient is one. 
A)  the price elasticity coefficient is at a maximum. 
B)  the price elasticity coefficient is at a minimum. 
C)  the price elasticity coefficient is zero. 
D)  the price elasticity coefficient is one.

Question 4

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

Accepted Answer

A) True 
 B)False

Question 5

Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil?

Accepted Answer

A)  The elasticity coefficient is likely to be very high, and supply is inelastic. 
B)  The elasticity coefficient is likely to be close to zero, and supply is perfectly elastic. 
C)  The elasticity coefficient is likely to be low, and supply is highly inelastic. 
D)  The elasticity coefficient is likely to be low, and supply is highly elastic. 
A)  The elasticity coefficient is likely to be very high, and supply is inelastic. 
B)  The elasticity coefficient is likely to be close to zero, and supply is perfectly elastic. 
C)  The elasticity coefficient is likely to be low, and supply is highly inelastic. 
D)  The elasticity coefficient is likely to be low, and supply is highly elastic.

Question 6

Suppose a 4 per cent increase in price results in a 2 per cent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterise the product.

Accepted Answer

A)  2; the product is elastic. 
B)  0.2; the product is inelastic. 
C)  0.5; the product is inelastic. 
D)  50%; the product is inelastic. 
A)  2; the product is elastic. 
B)  0.2; the product is inelastic. 
C)  0.5; the product is inelastic. 
D)  50%; the product is inelastic.

Question 7

Table 4-1
  
-Refer to Table 4-1.Suppose you own a bookstore.You believe that you can sell 40 copies per day of the latest John Grisham novel when the price is $35.You consider lowering the price to $25 and believe this will increase the quantity sold to 50 books per day.Compute the price elasticity of demand using the midpoint formula and these data.Select the correct implication from your work.

Accepted Answer

A)  The demand for the John Grisham book is inelastic. Revenue will fall if the price is lowered. 
B)  The demand for the John Grisham book is elastic. Revenue will rise if the price is lowered. 
C)  The demand for the John Grisham book is inelastic. Revenue will rise if the price is lowered. 
D)  The demand for the John Grisham book is elastic. Revenue will fall if the price is lowered. 
A)  The demand for the John Grisham book is inelastic. Revenue will fall if the price is lowered. 
B)  The demand for the John Grisham book is elastic. Revenue will rise if the price is lowered. 
C)  The demand for the John Grisham book is inelastic. Revenue will rise if the price is lowered. 
D)  The demand for the John Grisham book is elastic. Revenue will fall if the price is lowered.

Question 8

If demand is inelastic,the absolute value of the price elasticity of demand is

Accepted Answer

A)  one. 
B)  less than one. 
C)  greater than one. 
D)  greater than the absolute value of the slope of the demand curve. 
A)  one. 
B)  less than one. 
C)  greater than one. 
D)  greater than the absolute value of the slope of the demand curve.

Question 9

If a good has a negative income elasticity of demand,this indicates that the good is

Accepted Answer

A)  a substitute with another good. 
B)  a complement with another good. 
C)  inferior. 
D)  normal. 
A)  a substitute with another good. 
B)  a complement with another good. 
C)  inferior. 
D)  normal.

Question 10

When there are few close substitutes available for a good,demand tends to be

Accepted Answer

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

Question 11

Assume that the price elasticity of demand for petrol is -0.06.If a government tax causes the price of petrol to increase by 50 per cent,what will be the decrease in the quantity of petrol demanded?

Accepted Answer

A)  0.5 per cent 
B)  3.0 per cent 
C)  8.33 per cent 
D)  50 per cent 
A)  0.5 per cent 
B)  3.0 per cent 
C)  8.33 per cent 
D)  50 per cent

Question 12

If,at a price of $24,Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids,the demand for her orchids is

Accepted Answer

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

Question 13

If,for a given percentage decrease in price,quantity supplied decreases by a proportionately smaller percentage,then supply is

Accepted Answer

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

Question 14

The demand for petrol in the short run is

Accepted Answer

A)  elastic because people can easily switch to public transportation. 
B)  perfectly inelastic because people have no choice but to buy petrol. 
C)  unit-elastic because people tend to consume a stable amount of petrol per period. 
D)  inelastic because there are no good substitutes for petrol. 
A)  elastic because people can easily switch to public transportation. 
B)  perfectly inelastic because people have no choice but to buy petrol. 
C)  unit-elastic because people tend to consume a stable amount of petrol per period. 
D)  inelastic because there are no good substitutes for petrol.

Question 15

A linear downward-sloping demand curve has price elasticities (in absolute values)that

Accepted Answer

A)  increase as price decreases. 
B)  remain constant along the demand curve. 
C)  decrease as price decreases. 
D)  are greater than or equal to 1. 
A)  increase as price decreases. 
B)  remain constant along the demand curve. 
C)  decrease as price decreases. 
D)  are greater than or equal to 1.

Question 16

Which of the following statements is true?

Accepted Answer

A)  In general, if a product has few substitutes, it will have an elastic demand. 
B)  The more time that passes, the more inelastic the demand for a product becomes. 
C)  The demand curve for a necessity is more elastic than the demand curve for a luxury. 
D)  The more narrowly we define a market, the more elastic the demand for a product will be. 
A)  In general, if a product has few substitutes, it will have an elastic demand. 
B)  The more time that passes, the more inelastic the demand for a product becomes. 
C)  The demand curve for a necessity is more elastic than the demand curve for a luxury. 
D)  The more narrowly we define a market, the more elastic the demand for a product will be.

Question 17

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15,what is the absolute value of the price elasticity of demand? Use the midpoint formula.

Accepted Answer

A)  0.17 
B)  0.62 
C)  1.62 
D)  5 
A)  0.17 
B)  0.62 
C)  1.62 
D)  5

Question 18

The price elasticity of the supply of teenage labour services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula,calculate the approximate change in the quantity supplied of teenage labour.

Accepted Answer

A)  7.3 per cent 
B)  14.4 per cent 
C)  25.5 per cent 
D)  There is insufficient information to answer the question. 
A)  7.3 per cent 
B)  14.4 per cent 
C)  25.5 per cent 
D)  There is insufficient information to answer the question.

Question 19

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,then an increase in tolls will result in

Accepted Answer

A)  a decrease in total revenue. 
B)  a decrease in non-toll road usage. 
C)  an increase in total revenue. 
D)  an increase in toll road usage. 
A)  a decrease in total revenue. 
B)  a decrease in non-toll road usage. 
C)  an increase in total revenue. 
D)  an increase in toll road usage.

Question 20

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03.This means that

Accepted Answer

A)  beer and wine are substitutes and wine is an inferior good. 
B)  beer and wine are complements and wine is a luxury good. 
C)  beer and wine are substitutes and wine is a luxury good. 
D)  beer and wine are complements and wine is an inferior good. 
A)  beer and wine are substitutes and wine is an inferior good. 
B)  beer and wine are complements and wine is a luxury good. 
C)  beer and wine are substitutes and wine is a luxury good. 
D)  beer and wine are complements and wine is an inferior good.

A demand curve which is represents perfectly inelastic demand,and a demand curve which is represents inelastic demand.

The price elasticity of demand is equal to

Figure 4-3 -Refer to Figure 4-3.At the midpoint of the demand curve,in absolute value

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil?

Suppose a 4 per cent increase in price results in a 2 per cent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterise the product.

If demand is inelastic,the absolute value of the price elasticity of demand is

If a good has a negative income elasticity of demand,this indicates that the good is

When there are few close substitutes available for a good,demand tends to be

Assume that the price elasticity of demand for petrol is -0.06.If a government tax causes the price of petrol to increase by 50 per cent,what will be the decrease in the quantity of petrol demanded?

If,at a price of $24,Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids,the demand for her orchids is

If,for a given percentage decrease in price,quantity supplied decreases by a proportionately smaller percentage,then supply is

The demand for petrol in the short run is

A linear downward-sloping demand curve has price elasticities (in absolute values)that

Which of the following statements is true?

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15,what is the absolute value of the price elasticity of demand? Use the midpoint formula.

The price elasticity of the supply of teenage labour services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula,calculate the approximate change in the quantity supplied of teenage labour.

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,then an increase in tolls will result in

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03.This means that

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

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Comparative Advantage, international Trade, and Exchange Rates

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Exam 4: Market Efficiency and Market Failure

A demand curve which is ________ represents perfectly inelastic demand,and a demand curve which is ________ represents inelastic demand.

The price elasticity of demand is equal to

Figure 4-3 -Refer to Figure 4-3.At the midpoint of the demand curve,in absolute value

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil?

Suppose a 4 per cent increase in price results in a 2 per cent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterise the product.

If demand is inelastic,the absolute value of the price elasticity of demand is

If a good has a negative income elasticity of demand,this indicates that the good is

When there are few close substitutes available for a good,demand tends to be

Assume that the price elasticity of demand for petrol is -0.06.If a government tax causes the price of petrol to increase by 50 per cent,what will be the decrease in the quantity of petrol demanded?

If,at a price of $24,Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids,the demand for her orchids is

If,for a given percentage decrease in price,quantity supplied decreases by a proportionately smaller percentage,then supply is

The demand for petrol in the short run is

A linear downward-sloping demand curve has price elasticities (in absolute values)that

Which of the following statements is true?

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15,what is the absolute value of the price elasticity of demand? Use the midpoint formula.

The price elasticity of the supply of teenage labour services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula,calculate the approximate change in the quantity supplied of teenage labour.

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,then an increase in tolls will result in

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03.This means that

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

A demand curve which is represents perfectly inelastic demand,and a demand curve which is represents inelastic demand.