Question 1

The price elasticity of demand for a good measures the willingness of

Accepted Answer

A)   consumers to buy less of the good as price rises.
B)   consumers to avoid monopolistic markets in favour of competitive markets.
C)   firms to produce more of a good as price rises.
D)   firms to respond to the tastes of consumers.E) B) and C)
F) C) and D)

Question 2

Suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0.

Accepted Answer

A) True 
 B)False

Question 3

If the price elasticity of demand within the price range from R10 to R12.50 per kilogram for carrots is 0.79 and for radishes is 1.6, then within that price range

Accepted Answer

A)   demand for carrots is more price elastic than that for radishes.
B)   demand for radishes is more price elastic than that for carrots.
C)   carrots and radishes must be substitute goods.
D)   carrots and radishes must be complementary goods.E) A) and B)
F) All of the above

Question 4

Use the graph shown to answer the following questions. Put the correct letter(s) in the blank.  
a. The elastic section of the graph is represented by section from _______.
b. The inelastic section of the graph is represented by section from _______.
c. The unit elastic section of the graph is represented by section _______.
d. The portion of the graph in which a decrease in price would cause total revenue to fall would be from _________.
e. The portion of the graph in which a decrease in price would cause total revenue to rise would be from _________.
f. The portion of the graph in which a decrease in price would not cause a change in total revenue would be _________.
g. The section of the graph in which total revenue would be at a maximum would be _______.
h. The section of the graph in which elasticity is greater than 1 is _______.
i. The section of the graph in which elasticity is equal to 1 is ______.
j. The section of the graph in which elasticity is less than 1 is _______.

Accepted Answer

a. A to B
b. B to C
...

Question 5

If a demand curve is linear, the price elasticity of demand is constant along it.

Accepted Answer

A) True 
 B)False

Question 6

If the price elasticity of supply equals zero, this implies that

Accepted Answer

A)   suppliers can easily change quantity supplied when price changes.
B)   the supply curve is vertical.
C)   the percentage change in price of the good supplied is zero.
D)   the percentage change in quantity supplied equals the percentage change in price.E) C) and D)
F) None of the above

Question 7

The price elasticity of demand measures the

Accepted Answer

A)   magnitude of the response in quantity demanded to a change in price.
B)   direction of the shift in the demand curve in response to a market event.
C)   size of the shortage created by the increase in demand.
D)   responsiveness of quantity demanded to a change in income.E) All of the above
F) A) and B)

Question 8

A government seeking to raise revenue would be most likely to tax a good with a

Accepted Answer

A)   high income elasticity of demand.
B)   low cross-price demand elasticity.
C)   high price elasticity of demand.
D)   low price elasticity of demand.E) A) and B)
F) A) and C)

Question 9

The cross-price elasticity of demand for substitute goods must be

Accepted Answer

A)   greater than one.
B)   less than one.
C)   zero.
D)   greater than zero.E) None of the above
F) B) and D)

Question 10

If an increase in the price of a good has no impact on the total revenue in that market, demand must be

Accepted Answer

A)   perfectly elastic
B)   price inelastic.
C)   unit price elastic.
D)   price elastic.E) All of the above
F) A) and C)

Question 11

If the income elasticity of demand for a good is negative, it must be

Accepted Answer

A)   an elastic good.
B)   an inferior good.
C)   a normal good.
D)   a luxury good.E) A) and B)
F) A) and C)

Question 12

The demand for which of the following is likely to be the most price inelastic?

Accepted Answer

A)   Transportation
B)   Uber rides
C)   Bus tickets
D)   Airline ticketsE) None of the above
F) B) and D)

Question 13

If there is excess capacity in a production facility, it is likely that the firm's supply curve is

Accepted Answer

A)   price inelastic.
B)   perfectly inelastic.
C)   unit price elastic.
D)   price elastic.E) C) and D)
F) B) and C)

Question 14

If the cross-price elasticity between two goods is negative, the two goods are likely to be

Accepted Answer

A)   substitutes.
B)   complements.
C)   necessities.
D)   luxuries.E) None of the above
F) A) and C)

Question 15

If the cross-price elasticity of demand for two goods is negative, then the two goods are complements.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)   The price elasticity of demand for a good measures the willingness of buyers of the good to buy less of the good as its price increases.
B)   Price elasticity of demand reflects the many economic, psychological, and social forces that shape consumer tastes.
C)   Other things equal, if good x has close substitutes and good y does not have close substitutes, then the demand for good x will be more elastic than the demand for good y.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Exam 4: Elasticity and Its Applications

If the cross-price elasticity between two goods is negative, the two goods are likely to be

Correct Answer
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If the income elasticity of demand for a good is negative, it must be

Correct Answer
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Correct Answer
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a. A to B
b. B to C
...
View Answer

If the cross-price elasticity of demand for two goods is negative, then the two goods are complements.

Correct Answer
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If there is excess capacity in a production facility, it is likely that the firm's supply curve is

Correct Answer
verified

Suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0.

Correct Answer
verified

The price elasticity of demand for a good measures the willingness of

Correct Answer
verified

If the price elasticity of demand within the price range from R10 to R12.50 per kilogram for carrots is 0.79 and for radishes is 1.6, then within that price range

Correct Answer
verified

The price elasticity of demand measures the

Correct Answer
verified

The demand for which of the following is likely to be the most price inelastic?

Correct Answer
verified

A government seeking to raise revenue would be most likely to tax a good with a

Correct Answer
verified

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

Correct Answer
verified

If an increase in the price of a good has no impact on the total revenue in that market, demand must be

Correct Answer
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The cross-price elasticity of demand for substitute goods must be

Correct Answer
verified

If the price elasticity of supply equals zero, this implies that

Correct Answer
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If a demand curve is linear, the price elasticity of demand is constant along it.

Correct Answer
verified

Exam 4: Elasticity and Its Applications

If the cross-price elasticity between two goods is negative, the two goods are likely to be

Correct AnswerverifiedShow Answer

If the income elasticity of demand for a good is negative, it must be

Correct AnswerverifiedShow Answer

Correct Answerverifieda. A to Bb. B to C...View AnswerShow Answer

If the cross-price elasticity of demand for two goods is negative, then the two goods are complements.

Correct AnswerverifiedShow Answer

If there is excess capacity in a production facility, it is likely that the firm's supply curve is

Correct AnswerverifiedShow Answer

Suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0.

Correct AnswerverifiedShow Answer

The price elasticity of demand for a good measures the willingness of

Correct AnswerverifiedShow Answer

If the price elasticity of demand within the price range from R10 to R12.50 per kilogram for carrots is 0.79 and for radishes is 1.6, then within that price range

Correct AnswerverifiedShow Answer

The price elasticity of demand measures the

Correct AnswerverifiedShow Answer

The demand for which of the following is likely to be the most price inelastic?

Correct AnswerverifiedShow Answer

A government seeking to raise revenue would be most likely to tax a good with a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If an increase in the price of a good has no impact on the total revenue in that market, demand must be

Correct AnswerverifiedShow Answer

The cross-price elasticity of demand for substitute goods must be

Correct AnswerverifiedShow Answer

If the price elasticity of supply equals zero, this implies that

Correct AnswerverifiedShow Answer

If a demand curve is linear, the price elasticity of demand is constant along it.

Correct AnswerverifiedShow Answer

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a. A to B
b. B to C
...
View Answer

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