Quiz 4: Elasticity

When the price elasticity of demand is 2 and the price increases by 10 percent,the quantity demanded A)decreases by 2 percent. B)decreases by 20 percent. C)decreases by 5 percent. D)increases by 2 percent. E)increases by 20 percent.

The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same. A)quantity demanded of a good to a change in the price of a substitute or complement B)quantity demanded of a good to a change in income C)quantity demanded of a good to a change in its price D)price to a change in the quantity demanded of a good E)quantity demanded of a good to a change in supply

The concept used by economists to indicate the responsiveness of the quantity demanded of a good to a change in its price is the A)cross elasticity of demand. B)income elasticity of demand. C)substitute elasticity of demand. D)price elasticity of demand. E)elasticity of supply.

If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded,the price elasticity of demand is A)0.8. B)1.25. C)8. D)0.125. E)80.

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded, A)demand is inelastic. B)demand is elastic. C)demand is unit elastic. D)the price elasticity of demand is close to infinity. E)the price elasticity of demand is zero.

The price of an apple falls by 5 percent and quantity of apples demanded increases by 6 percent.The demand for apples is A)perfectly elastic. B)unit elastic. C)elastic. D)perfectly inelastic. E)inelastic.

The price of a bus ride rises by 3 percent and quantity of oranges demanded decreases by 3 percent.The demand for bus rides is A)inelastic. B)elastic. C)perfectly inelastic. D)perfect elastic. E)unit elastic.

The price of a plum falls by 8 percent and quantity of plums demanded increases by 4 percent.The demand for plums is A)inelastic. B)perfectly elastic. C)perfectly inelastic. D)elastic. E)unit elastic.

The price of good A falls by 10 percent and quantity of good A demanded does not change.The demand for good A is A)perfectly elastic. B)inelastic. C)perfectly inelastic. D)elastic. E)unit elastic.

Which one of the following illustrates an inelastic demand? A)A 10 percent rise in price leads to a 5 percent decrease in quantity demanded. B)A 10 percent rise in price leads to a 20 percent decrease in quantity demanded. C)A price elasticity of demand equal to infinity. D)A price elasticity of demand equal to 1.0. E)A price elasticity of demand equal to 2.0.

Which one of the following illustrates an elastic demand? A)A 10 percent rise in price leads to a 5 percent decrease in quantity demanded. B)A 10 percent rise in price leads to a 20 percent decrease in quantity demanded. C)A price elasticity of demand equal to 0.2. D)A price elasticity of demand equal to 1.0. E)A price elasticity of demand equal to zero.

If a 12 percent fall in price results in an 8 percent increase in quantity demanded,the price elasticity of demand equals A)0.96. B)0.12. C)0.67. D)1.5. E)0.8.

The demand for good A is unit elastic if A)a 5 percent fall in the price of A results in an infinite increase in the quantity of A demanded. B)a 5 percent rise in the price of A results in a 10 percent decrease in the quantity of A demanded. C)any increase in the price of A results in a 1 percent decrease in the quantity of A demanded. D)a 5 percent rise in the price of A results in no change in the quantity of A demanded. E)a 5 percent rise in the price of A results in a 5 percent decrease in the quantity of A demanded.

Demand is inelastic if A)a small change in price results in a large change in quantity demanded. B)the quantity demanded is very responsive to a change in price. C)the price elasticity of demand is 0.2. D)the price does not change when supply increases. E)a 10 percent change in price results in a 1 percent change in the quantity supplied.

If the demand curve for a good is a horizontal line,then the good has A)zero income elasticity. B)price elasticity of demand equal to zero. C)a perfectly elastic demand. D)a price elasticity of demand that is likely to rise in the short run. E)a price elasticity of demand that is likely to fall in the short run.

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded,the demand curve for this good A)is vertical. B)is horizontal. C)has slope equal to -1. D)is a straight line with slope equal to -10. E)is downward sloping and bowed toward the origin.

A unit elastic demand A)means that the magnitude of the ratio of a change in quantity demanded to a change in price is equal to 1. B)means that the magnitude of the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1. C)means that the magnitude of the ratio of a change in price to a change in quantity demanded is equal to 1. D)is illustrated by a horizontal demand curve. E)is illustrated by a vertical demand curve.

When the price of a box of cereal is $5,the quantity demanded is 800 boxes.When the price of a box of cereal is $7,the quantity demanded is 400 boxes.Calculate the price elasticity of demand when the price of a box of cereal is $6. A)0.5 B)200 C)0.005 D)1.0 E)2.0

When the price of a pair of gloves is $21,the quantity demanded is 600 pairs.When the price of a pair of gloves is $15,the quantity demanded is 1,000 pairs.Calculate the price elasticity of demand when the price of a pair of gloves is $18. A)1.5 B)0.67 C)66.7 D)0.015 E)1.0

When the price of gas is $1.00 a litre,the quantity demanded is 1,750 litres.When the price of gas is $2.00 a litre,the quantity demanded is 1,250 litres.Calculate the price elasticity of demand when the price is $1.50 a litre. A)2.0 B)5.0 C)0.5 D)20 E)1.5

Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent.The price elasticity of demand is A)2.0. B)0.5. C)10. D)0.02. E)50.

Suppose that the price elasticity of demand for bottled water in Sackville,New Brunswick is 1.5,and the price elasticity of demand for bottled water in Prince Albert,Saskatchewan is 0.8.The demand for bottled water in Sackville is ________ and demand for bottled water in Prince Albert is ________. A)unit elastic;unit elastic B)perfectly elastic;inelastic C)inelastic;elastic D)elastic;inelastic E)elastic;unit elastic

Suppose the government of Nova Scotia wants to reduce the consumption of electricity by 5 percent.The price elasticity of demand for electricity is 0.40.You advise the Nova Scotia government to A)raise the price of electricity by 12.5 percent. B)raise the price of electricity by 2 percent. C)lower the price of electricity by 12.5 percent. D)raise the price of electricity by 8 percent. E)lower the price of electricity by 2 percent.

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.0,the company must A)raise the price of a computer by 2.0 percent. B)raise the price of a computer by 0.5 percent. C)lower the price of a computer by 1.8 percent. D)lower the price of a computer by 2.0 percent. E)lower the price of a computer by 0.5 percent.

If the demand for salmon in Cape Breton,Nova Scotia,is unit elastic,the price elasticity of demand for salmon equals A)1.0. B)100.0. C)0.10. D)zero. E)10.0.

At a price of $15,Jack's quantity demanded of good A is the same as when the price rises to $16.Jack's demand for good A is A)elastic. B)inelastic. C)perfectly elastic. D)unit elastic. E)perfectly inelastic.

Which one of the following situations gives a price elasticity of demand of 5.0? A 10 percent rise in price is accompanied by a A)2 percent increase in quantity demanded. B)5 percent decrease in quantity demanded. C)2 percent decrease in quantity demanded. D)50 percent decrease in quantity demanded. E)50 percent increase in quantity demanded.

Use the table below to answer the following questions. Table 4.1.1 Demand schedule for good A. -Refer to Table 4.1.1.The price elasticity of demand when the price is $6 is A)1.0. B)2.0. C)2.6. D)0.5. E)2,000.

Use the table below to answer the following questions. Table 4.1.1 Demand schedule for good A. -Refer to Table 4.1.1.Demand is unit elastic when the price is A)$5.00. B)$9.00. C)$5.50. D)$4.50. E)$3.50.

For which one of the following will demand be the most price inelastic? A)milk B)Happy Cow brand milk C)Happy Cow brand milk in Regina D)Happy Cow brand milk at Ralph's Grocery Store in Regina E)All of the above will exhibit the same price elasticity of demand.

For which one of the following is demand likely to be most price inelastic? A)diamonds B)insulin for a diabetic C)potatoes D)gasoline E)books

Demand will be more inelastic the A)lower the price of the good. B)smaller the quantity demanded of the good. C)longer the passage of time after a price increase. D)fewer substitutes for the good that are available. E)larger the fraction of income spent on the good.

Demand will be more elastic the A)lower the price of the good. B)greater the quantity demanded of the good. C)longer the passage of time after a price increase. D)fewer substitutes for the good that are available. E)smaller the fraction of income spent on the good.

Use the figure below to answer the following question. Figure 4.1.1 -Figure 4.1.1 illustrates a linear demand curve.Comparing the price elasticity when price is $3 with the price elasticity when price is $8,we can conclude that A)demand is more elastic when price is $8. B)demand is more elastic when price is $3. C)the price elasticity of demand is equal when price is $8 and when price is $3. D)demand is elastic when price is $8 and unit elastic when price is $3. E)demand is inelastic when price is $3 and unit elastic when price is $8.

Use the figure below to answer the following questions. Figure 4.1.2 -Figure 4.1.2 illustrates a linear demand curve.If the price falls from $13 to $11, A)total revenue increases. B)total revenue decreases. C)total revenue remains unchanged. D)total revenue initially increases then decreases. E)total revenue initially decreases then increases.

Use the figure below to answer the following questions. Figure 4.1.2 -Figure 4.1.2 illustrates a linear demand curve.If the price falls from $4 to $2, A)total revenue increases. B)total revenue decreases. C)total revenue remains unchanged. D)the quantity demanded increases by more than 10 percent. E)the percentage change in quantity demanded is more than the percentage change in price.

The quantity of apples demanded decreases by 8 percent when the price of an apple rises by 8 percent.The demand for apples is A)unit elastic. B)inelastic. C)elastic. D)perfectly elastic. E)perfectly inelastic.

When a good has a vertical demand curve,the price elasticity of demand for the good is A)zero. B)greater than zero but less than 1. C)1. D)greater than 1. E)negative.

A given percentage rise in the price of a good is likely to result in a larger percentage decrease in the quantity of the good demanded A)the shorter the passage of time since the price change. B)the larger the proportion of income spent on it. C)the more difficult it is to obtain good substitutes. D)the lower the price. E)all of the above.

For which one of the following will demand be the most price elastic? A)daily newspapers B)Ontario newspapers C)Toronto newspapers D)the Toronto Star E)Each of the above will exhibit the same price elasticity of demand.

This winter France had unusually cold weather.Next year's grape crop will be substantially reduced.Select the best statement. A)The French wine supply increases as price rises. B)If the demand for French wine is elastic,wine producers experience an increase in total revenue. C)The initial change in the market creates a surplus of French wine. D)In the final equilibrium,price and quantity are higher. E)If the demand for French wine is inelastic,wine producers experience an increase in total revenue.

If the price elasticity of demand is 2,then a 1 percent fall in price A)doubles the quantity demanded. B)decreases the quantity demanded by half. C)increases the quantity demanded by 2 percent. D)decreases the quantity demanded by 2 percent. E)increases the quantity demanded by 0.5 percent.

Business owners are speaking about the price elasticity of demand without using the actual term.Which one of the following statements describes a good with a price elastic demand? A)"A price cut won't help me.It won't increase sales,and I'll just get less money for each unit." B)"I don't think a price cut will make any difference to my bottom line.What I may gain from selling more I would lose on the lower price." C)"My customers are real bargain hunters.Since I set my prices just a few cents below my competitors,customers have flocked to the store,and sales are booming." D)"With the recent economic recovery,people have more income to spend and sales are booming,even at the previous prices." E)"A very cold winter has increased my sales of skates and hockey sticks."

If a rise in price decreases total revenue,then the price elasticity of demand is A)negative. B)zero. C)greater than zero but less than 1. D)equal to 1. E)greater than 1.

Suppose a university decides to raise tuition fees to increase the total revenue it receives from students.This policy works only if the demand for a university education A)is unit elastic. B)is inelastic. C)is elastic. D)has a price elasticity greater than 1. E)is perfectly elastic.

The demand for a good is perfectly elastic when the price elasticity of demand is A)equal to infinity. B)between infinity and 1. C)equal to 1. D)between 1 and zero. E)equal to zero.

When the price elasticity of demand is ________,demand for the good is perfectly inelastic. A)negative B)greater than 1 C)equal to 1 D)between 1 and zero E)equal to zero

When the price elasticity of demand is ________,demand for the good is elastic. A)positive B)greater than 1 C)equal to 1 D)between 1 and zero E)equal to zero

When the price elasticity of demand is ________,demand for the good is unit elastic. A)positive B)greater than 1 C)equal to 1 D)between 1 and zero E)equal to zero

The price elasticity of demand for airplane travel one year in advance of the departure date is most likely to be A)negative. B)equal to zero. C)between zero and 1. D)equal to 1. E)greater than 1.

The price elasticity of demand for airplane travel one week in advance of the departure date is most likely to be A)negative. B)equal to zero. C)between zero and 1. D)equal to 1. E)greater than 1.

A cut in the price increases total revenue.Demand is A)inelastic. B)unit elastic. C)perfectly inelastic. D)equal to supply. E)elastic.

Suppose Swiss Chalet in Moncton knows that the demand for their half-chicken meals is elastic.If the manager wants to increase total revenue from half-chicken meal sales,he should A)lower the price of a half-chicken meal. B)not change the price of a half-chicken meal. C)raise the price of a half-chicken meal. D)decrease the supply of half-chicken meals. E)hire fewer employees.

As a result of a poor growing season,the supply of apples decreases and total revenue falls.The demand for apples is A)perfectly inelastic. B)elastic. C)inelastic. D)unit elastic. E)either elastic or unit elastic.

Which of the following will have the most elastic demand? A)frozen desserts B)ice cream C)strawberry ice cream D)a banana split made with strawberry and chocolate ice cream E)a banana split with Nestle strawberry and chocolate ice cream

Suppose your annual income is $65,000 and you pay $30 a year for your favourite magazine.Your demand for the magazine is likely to be A)perfectly elastic. B)inelastic. C)unit elastic. D)elastic. E)elastic - the same as your demand for all other goods.

The price of gasoline rises by 25 percent and remains fixed at the new higher level.Choose the correct statement. A)The demand for gasoline will increase after consumers adjust their consumption behaviour to the new higher price. B)The demand for gasoline will decrease after consumers adjust their consumption behaviour to the new higher price. C)Initially after the price change,the demand for gasoline will be less elastic than it will be a few years after the price change. D)The price elasticity of demand for gasoline will decrease in the future. E)Initially after the price change,the demand for gasoline will be more elastic than it will be a few years after the price change.

The demand for a good is price elastic if A)a rise in price increases total revenue. B)a fall in price decreases total revenue. C)a rise in price decreases total revenue. D)the good is a necessity. E)the demand for the good is very insensitive to changes in price.

The demand for a good is price inelastic if A)a rise in price increases total revenue. B)a rise in price decreases total revenue. C)an increase in income decreases total revenue. D)an increase in income increases total revenue. E)the good is a luxury.

Demand for a good is unit elastic.When price rises by 5 percent,total revenue A)increases by 5 percent. B)decreases by 5 percent. C)does not change. D)increases by more than 5 percent. E)decreases by more than 5 percent.

Total revenue from the sale of a good decreases if A)income increases and the good is a normal good. B)its price rises and demand is elastic. C)its price rises and demand is inelastic. D)income falls and the good is an inferior good. E)its price falls and demand is elastic.

If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue,then Saudi Arabia believes the demand for oil is A)income inelastic. B)income elastic. C)elastic. D)inelastic. E)unit elastic.

Suppose there is an increase in the cost of resources used in the production of good A.Then A)if the price of A rises,the demand for A is elastic. B)if the total revenue from sales of A increases,the demand for A is elastic. C)if the total revenue from sales of A decreases,the demand for A is elastic. D)total revenue increases because the price of A rises. E)total revenue decreases because the quantity bought and sold of A decreases.

When the price of peanut butter rises by 4 percent,total revenue decreases by 8 percent.The demand for peanut butter is A)elastic. B)inelastic. C)unit elastic. D)perfectly elastic. E)perfectly inelastic.

A good has a price elasticity of demand equal to zero.As the price of the good falls,the A)total revenue does not change. B)quantity demanded does not change. C)quantity demanded falls to zero. D)total revenue increases. E)quantity demanded increases.

A technological breakthrough lowers the cost of photocopiers.If the demand for photocopiers is price inelastic,photocopier sales A)fall and total revenue increases. B)fall and total revenue decreases. C)rise and total revenue increases. D)rise and total revenue decreases. E)rise,but changes in total revenue will depend on elasticity of supply.

A decrease in tuition fees decreases the university's total revenue if the price elasticity of demand for university education is A)negative. B)greater than zero but less than 1. C)equal to 1. D)greater than 1. E)less than the elasticity of supply.

The demand for orange juice is price elastic.A severe frost,which destroys large quantities of oranges, A)lowers the equilibrium price but increases total consumer spending on juice. B)decreases the equilibrium quantity and decreases total consumer spending on juice. C)decreases both the equilibrium quantity and the price of juice. D)raises the equilibrium price and increases total consumer spending on juice. E)raises the equilibrium price but leaves total consumer spending on juice unchanged.

Tina and Brian work for the same recording company.Tina claims they would be better off by raising the price of their CDs,while Brian claims they would be better off by lowering the price.Choose the correct statement. A)Tina thinks the demand for CDs has price elasticity of demand equal to zero,and Brian thinks price elasticity of demand equals 1. B)Tina thinks the demand for CDs has price elasticity of demand equal to 1,and Brian thinks price elasticity of demand equals zero. C)Tina thinks the demand for CDs is price elastic,and Brian thinks it is price inelastic. D)Tina thinks the demand for CDs is price inelastic,and Brian thinks it is price elastic. E)Tina and Brian both think the demand for CDs is unit elastic.

Use the figure below to answer the following question. Figure 4.1.3 -Given the relationship shown in Figure 4.1.3 between total revenue from the sale of a good and the quantity of the good sold,then A)this is an inferior good. B)this is a normal good. C)the price elasticity of demand is zero. D)demand for this good is perfectly elastic. E)the price elasticity of demand is 1.

If the Canucks lower ticket prices and total ticket revenue does not change,then the price elasticity of demand for tickets is A)zero. B)greater than zero but less than 1. C)equal to 1. D)greater than 1. E)negative.

A good has a price elasticity of demand equal to 2.If an increase in supply lowers its price from $1.20 to $0.80,the percentage change in quantity demanded is A)an increase of 80 percent. B)a decrease of 80 percent. C)a decrease of 40 percent. D)an increase of 2 percent. E)an increase of 40 percent.

If the demand for good Z is perfectly inelastic,then the demand curve for good Z is A)vertical. B)horizontal. C)upward sloping. D)downward sloping. E)initially upward sloping and then downward sloping.

Suppose the demand curve for good X is horizontal.The demand for good X is A)unit elastic. B)inelastic. C)perfectly elastic. D)perfectly inelastic. E)elastic.

If the price elasticity of demand is zero,then demand is A)elastic. B)inelastic. C)perfectly inelastic. D)perfectly elastic. E)unit elastic.

Use the table below to answer the following question. Table 4.1.2 -Refer to Table 4.1.2.The price elasticity of demand for Jolt A)equals 1. B)equals 2.5. C)equals 3.0. D)equals 0.33. E)cannot be calculated because income is not constant.

Use the table below to answer the following question. Table 4.1.2 -Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent.Following the price change,consumers spend A)more of their income on bison. B)the same amount of their income on bison as before. C)less of their income on bison. D)more on products that are complements of bison. E)zero dollars on bison meat.

Use the table below to answer the following question. Table 4.1.3 -Refer to Table 4.1.3.The table shows the demand schedule for computer chips.As the price rises from $200 a chip to $300 a chip,total revenue ________.So at a price of $250 a chip,demand is ________. A)falls;inelastic B)rises;inelastic C)falls;rises D)rises;elastic E)rises;unit elastic

Use the table below to answer the following question. Table 4.1.4 -Refer to Table 4.1.4.The demand for hotel rooms is ________ because ________. A)inelastic;if the price is set low enough,total revenue will decrease B)elastic;if the price is set high enough,total revenue will decrease C)unit elastic;a price cut leaves total revenue unchanged.Total revenue never reaches a maximum D)decreasing as the price falls;the demand curve for hotel rooms is a straight-line demand curve E)inelastic;if the price is set low enough,total revenue will increase

When the price of a good increases by 5 percent,the quantity demanded decreases by 10 percent.The price elasticity of demand is ________.A price rise will ________ total revenue. A)2.0;decrease B)0.5;decrease C)2.0;increase D)0.5;increase E)-2.0;decrease

When the price of a good increases by 6 percent,the quantity demanded decreases by 3 percent.Most likely,this good ________ and ________. A)is a necessity;has poor substitutes B)has poor substitutes;is a luxury C)is a necessity;has good substitutes D)is a luxury;is narrowly defined E)is a luxury;has experienced a recent price change

The price elasticity of demand for purses A)is measured in dollars. B)is measured in purses. C)is measured in dollars per purse. D)is measured in purses per dollar. E)has no units.

The price elasticity of demand depends on A)the units used to measure price and the units used to measure quantity. B)the units used to measure price but not the units used to measure quantity. C)the units used to measure quantity but not the units used to measure price. D)neither the units used to measure price nor the units used to measure quantity. E)the relative price of the good.

When the quantity of coal is measured in kilograms instead of pounds,the demand for coal becomes A)more elastic. B)less elastic. C)neither more nor less elastic. D)perfectly elastic. E)perfectly inelastic.

The price elasticity of demand for oranges ________ if the quantity is measured in pounds instead of kilograms and ________ if the price is measured in dollars instead of cents. A)changes;changes B)changes;does not change C)does not change;changes D)does not change;does not change E)increases;decreases

Suppose the quantity of gasoline is measured in litres and the price of gasoline is measured in dollars.The price elasticity of demand is 0.67.If the price of gasoline is then measured in cents rather than in dollars,the price elasticity of demand would be A)6.7. B)67.0. C)0.67. D)0.0067. E)negative.

The amount of time elapsed since a price change influences the price elasticity of demand because as more time passes, A)consumers find more substitutes and the price elasticity of demand for the original good decreases. B)consumers find more substitutes and the price elasticity of demand for the original good increases. C)the price of the good will return to its original value. D)the income of consumers rises and the price elasticity of demand for the good increases. E)the income of consumers rises and the price elasticity of demand for the good decreases.

Demand is perfectly inelastic when A)a good has perfect substitutes. B)an increase in supply does not change total revenue. C)a decrease in supply decreases total revenue. D)the price elasticity of demand is negative. E)an increase in supply does not change the equilibrium quantity.

Sally's Ski Shoppe maximizes total revenue when the price elasticity of demand for skis is A)greater than 10. B)greater than 1 but less than 10. C)zero. D)1. E)-1.

Demand is unit elastic when A)an increase in supply does not change the price of the good. B)a decrease in supply raises the price of the good. C)a change in price does not change total revenue. D)the slope of the demand curve is -1. E)the slope of the demand curve is +1.

If the price elasticity of demand for peaches is 1.8 and the price elasticity of demand for apples is 1.6,then consumers are A)more sensitive to a change in the price of apples than they are to a change in the price of peaches. B)more sensitive to a change in the price of peaches than they are to a change in the price of apples. C)more likely to substitute strawberries for peaches than for apples. D)more likely to substitute strawberries for apples than for peaches. E)eating more peaches than apples.

With higher fuel costs,airlines raise their average fare from $0.50 to $1.50 per passenger kilometre and the number of passenger kilometres decreases from 2.5 million a day to 1.5 million a day.What is the price elasticity of demand for air travel when the price is $1 per passenger kilometre? A)2 B)0.75 C)1.33 D)50 E)0.5

With higher fuel costs,airlines raise their average fare from $0.50 to $1.50 per passenger kilometre and the number of passenger kilometres decreases from 2.5 million a day to 1.5 million a day.When the price is $1 per passenger kilometre,the demand for air travel is A)perfectly elastic. B)perfectly inelastic. C)unit elastic. D)elastic. E)inelastic.

In 2003,when music downloading first took off,Universal Music slashed the average price of a CD from $21 to $15.The company expected the price cut to boost the quantity of CDs sold by 30 percent,other things remaining the same.What was Universal Music's estimate of the price elasticity of demand for CDs? A)0.9 B)90 C)1.11 D)0.011 E)0.2

In 2003,when music downloading first took off,Universal Music slashed the average price of a CD from $21 to $15.The company expected the price cut to boost the quantity of CDs sold by 30 percent,other things remaining the same.If you are making the pricing decision at Universal Music,what would you do? A)lower the price because demand is inelastic B)raise the price because demand is elastic C)raise the price because demand is inelastic D)lower the price because demand is elastic E)not change the price because demand is unit elastic

Figure 4.1.4 -Figure 4.1.4 shows the demand curve for pizza.What is the price elasticity of demand when the price of a pizza is $20? A)0.25 B)2.0 C)4.0 D)20 E)0.05

Figure 4.1.4 -Figure 4.1.4 shows the demand curve for pizza.What is the price elasticity of demand when the price of a pizza is $5? A)0.25 B)2.0 C)4.0 D)20 E)0.05

Figure 4.1.4 -Figure 4.1.4 shows the demand curve for pizza.At what price is the price elasticity of demand equal to 1? A)$12.50 B)$15.00 C)$10.00 D)$25.00 E)zero

Use the table below to answer the following question. Table 4.2.1 -Consider the information in Table 4.2.1.The income elasticity of demand is A)-2.5. B)2.5. C)-3.33. D)3.33. E)-1.33.

The income elasticity of demand equals the percentage change in ________,other things remaining the same. A)price divided by the percentage change in income B)price divided by the percentage change in quantity demanded C)income divided by the percentage change in quantity demanded D)quantity demanded divided by the percentage change in price E)quantity demanded divided by the percentage change in income

If the quantity of carrots demanded increases by a small percentage when income increases by a large amount,the demand for carrots is A)price elastic. B)price inelastic. C)income inferior. D)income elastic. E)income inelastic.

If the quantity of carrots demanded increases by a large percentage when income increases by a small amount,the demand for carrots is A)price elastic. B)price inelastic. C)income inferior. D)income inelastic. E)income elastic.

Which one of the following is true if demand is income inelastic? A)The percentage change in income is greater than the percentage change in quantity demanded. B)The percentage change in income is smaller than the percentage change in quantity demanded. C)An increase in income decreases demand. D)The good is an inferior good. E)A rise in price increases the quantity demanded.

Which one of the following is true if demand is income elastic? A)The percentage change in income is greater than the percentage change in quantity demanded. B)The percentage change in income is smaller than the percentage change in quantity demanded. C)An increase in income decreases demand. D)The good is an inferior good. E)A rise in price increases the quantity demanded.

Fred's income increases from $1,950 per week to $2,050 per week.As a result,he decides to increase the number of movies he attends each month by 10 percent.Fred's demand for movies is A)price elastic. B)price inelastic. C)income elastic. D)income inelastic. E)income inferior.

Fred's income increases from $840 per week to $1,160 per week.As a result,he decides to purchase 24 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is A)0.32. B)1.33. C)24. D)0.24. E)0.75.

Fred's income increases from $800 per week to $1,200 per week.As a result,he decides to purchase 40 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is A)0.40. B)40. C)1.0. D)0.12. E)10.

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is A)2.5. B)0.8. C)0.4. D)1.2. E)2.0.

If a 10 percent increase in income results in a 5 percent increase in quantity demanded,what is the income elasticity of demand? A)0.5 B)-0.5 C)2.0 D)-2.0 E)1.5

If a 10 percent increase in income results in a 10 percent decrease in the consumption of widgets,then A)the price elasticity of demand for widgets equals 1. B)the income elasticity of demand for widgets is negative. C)the income elasticity of demand for widgets equals 1. D)widgets are a normal good. E)the price elasticity of demand for widgets is negative.

Luxury goods tend to have income elasticities of demand that are A)greater than 1. B)greater than zero but less than 1. C)less than the income elasticities of demand for necessities. D)negative. E)first positive and then negative as income increases.

The cross elasticity of demand between any two goods is defined as the A)percentage change in the quantity demanded of one good divided by the percentage change in the price of the other good. B)change in the price elasticity of demand for one good divided by the change in the price elasticity of demand for the other good. C)percentage change in the quantity of a good demanded divided by the percentage change in its price. D)percentage change in the quantity of a good demanded divided by the percentage change in income. E)percentage change in the price of one good divided by the percentage change in the price of the other good.

If the cross elasticity of demand between goods A and B is positive,then A)the demands for A and B are both price elastic. B)the demands for A and B are both price inelastic. C)A and B are complements. D)A and B are substitutes. E)A and B are inferior goods.

If the cross elasticity of demand between goods A and B is negative,then A)the demands for A and B are both price elastic. B)the demands for A and B are both price inelastic. C)A and B are complements. D)A and B are substitutes. E)A and B are normal goods.

If the cross elasticity of demand between beef and bison is 1.5,then a 3 percent increase in the price of beef will lead to a ________ in the quantity of bison demanded. A)4.5 percent increase B)4.5 percent decrease C)2 percent increase D)2 percent decrease E)0.5 percent increase

If the quantity of chicken demanded increases by 1.25 percent when the price of beef increases by 2.5 percent,the cross elasticity of demand between chicken and beef is A)3.125. B)-3.125. C)-0.5. D)2.0. E)0.5.

If a rise in the price of good B increases the demand for good A,then A)A and B are substitutes and the cross elasticity of demand for good A with respect to the price of good B is positive. B)A and B are complements. C)the cross elasticity of demand between A and B is 1. D)A and B are substitutes and the cross elasticity of demand for good A with respect to the price of good B is negative. E)the demand for A is price elastic.

If an increase in the supply of good A increases the demand for good B,then A)the cross elasticity of supply for good B with respect to the price of good A is positive. B)the elasticity of supply for good A is greater than 1. C)A and B are complements. D)A and B are substitutes. E)the demand for A is price elastic.

If an increase in the supply of good A decreases the demand for good B,then A)the cross elasticity of supply for good B with respect to the price of good A is negative. B)the elasticity of supply for good A is greater than 1. C)A and B are complements. D)A and B are substitutes. E)the demand for A is price elastic.

A rise in the price of good A shifts the A)demand curve for good B rightward if the cross elasticity of demand for good B with respect to the price of A is negative. B)demand curve for good B rightward if the cross elasticity of demand for good B with respect to the price of A is positive. C)supply curve of B rightward if the cross elasticity of demand for good B with respect to the price of A is negative. D)supply curve of B rightward if the cross elasticity of demand for good B with respect to the price of A is positive. E)demand curve for B rightward if the income elasticity of demand for B is positive.

If the cross elasticity of demand between peanut butter and jelly is negative,then A)a rise in the price of peanut butter results in a rise in the equilibrium price of jelly. B)a rise in the price of peanut butter results in a fall in the equilibrium price of jelly. C)a rise in the price of peanut butter has no effect on the equilibrium price of jelly. D)a fall in the price of peanut butter results in a fall in the equilibrium price of jelly. E)peanut butter and jelly are substitutes.

Suppose a fall from $110 to $90 in the price of playing golf on a public golf course increases the quantity of golf balls demanded from 9,950 units to 10,050 units.The cross elasticity of demand of playing golf with respect to the price of golf balls is A)-0.05. B)-0.1. C)0.01. D)20.0. E)0.05.

A fall in the price of X from $6 to $4 increases the quantity of Y demanded from 900 to 1,100 units.What is the cross elasticity of demand for Y with respect to the price of X? A)0.5 B)-0.5 C)2 D)-2 E)Either 0.5 or -0.5,depending on whether X and Y are substitutes or complements.

If good A is a substitute for good B,then the cross elasticity of demand for good B with respect to the price of good A is A)negative. B)equal to 1. C)positive. D)zero. E)equal to the cross elasticity of demand for good A with respect to the price of good B.

If good A is a complement of good B,then the cross elasticity of demand for good B with respect to the price of good A is A)equal to 1. B)equal to the cross elasticity of demand for good A with respect to the price of good B. C)positive. D)zero. E)negative.

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2.The cross elasticity of demand for Jolt with respect to the price of Coke is A)0.75. B)1.5. C)0.40. D)10. E)-1.5.

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2.The income elasticity of demand for Jolt is A)+0.67. B)-0.67. C)+1.5. D)-1.5. E)zero.

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2.All of the following statements regarding Jolt are true except A)it has an elastic demand. B)it is an inferior good. C)it is a substitute for Coke. D)it has a negative cross elasticity of demand with respect to the price of Coke. E)it has a negative income elasticity of demand.

The cross elasticity of demand for good A with respect to the price of good B is -1.5.A 10 percent rise in the price of good B will lead to A)an increase of 1.5 percent in the quantity of A demanded. B)an increase of 15 percent in the quantity of A demanded. C)a decrease of 15 percent in the quantity of A demanded. D)an increase of 6.7 percent in the quantity of A demanded. E)a decrease of 6.7 percent in the quantity of A demanded.

A good has an income elasticity of +0.5.An increase in income from $15,000 to $25,000 will lead to a A)2.5 percent increase in the quantity demanded of the good. B)5 percent increase in the quantity demanded of the good. C)5 percent decrease in the quantity demanded of the good. D)25 percent decrease in the quantity demanded of the good. E)25 percent increase in the quantity demanded of the good.

A negative value for A)price elasticity of supply implies an upward-sloping supply curve. B)cross elasticity of demand implies that the goods are complements. C)price elasticity of demand implies an inferior good. D)income elasticity of demand implies a normal good. E)income elasticity of demand implies an error in your calculation.

If Mr.Brown's income increases by 12 percent and his quantity demanded of music downloads increases by 4 percent,Mr.Brown's income elasticity of demand for music downloads is A)3.0. B)0.33. C)-0.33. D)-3.0. E)48.0.

When Erika's income increases by 6 percent,her demand for tickets to professional hockey games increases by 3 percent.Erika's demand for tickets is income ________.For Erika,hockey tickets are ________ good. A)elastic;a normal B)inelastic;an inferior C)elastic;an inferior D)inelastic;a normal E)inelastic;a normative

Suppose Clyde always eats ice cream and chocolate syrup together.If the price of syrup increases by 10 percent,and the cross elasticity of demand is -2,his quantity of ice cream demanded A)increases by 5 percent. B)increases by 20 percent. C)decreases by 5 percent. D)decreases by 20 percent. E)decreases by 2 percent.

If the cross elasticity of demand between two goods is -0.50,then a fall in the price of one good leads to a ________ shift of the ________ curve of the other good. A)rightward;demand B)rightward;supply C)leftward;demand D)leftward;supply E)rightward;demand curve and the supply

In the nation of Transporta,the income elasticity of demand for used cars is -2.66.If incomes in this nation increase by 10 percent, A)the quantity of used cars demanded increase by 26.6 percent. B)used cars will be normal goods. C)the quantity of used cars demanded decrease by 26.6 percent. D)the demand curve for used cars shifts rightward. E)the supply curve of used cars shifts rightward.

All normal goods have A)an income elasticity of demand greater than 1.0. B)a price elasticity of demand greater than 1.0. C)a negative price elasticity of demand. D)a positive income elasticity of demand. E)a negative cross elasticity of demand.

There is an increase in the price of broccoli because of the disastrous weather that destroyed half of this year's spinach crop.Choose the statement that is correct. A)The demand curve for broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is positive. B)The demand curve for broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. C)The supply curve of broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is positive. D)The supply curve of broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. E)The demand curve for broccoli shifted leftward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative.

The income elasticity of demand is largest for A)food. B)clothing. C)shelter. D)used cars. E)luxury cars.

If the income elasticity of demand for chocolate chip cookies is 1.5,then chocolate chip cookies are A)a normal good and income elastic. B)a normal good and income inelastic. C)price elastic. D)an inferior good and income elastic. E)an inferior good and income inelastic.

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is ________.Coke and Pepsi are ________. A)positive;normal goods B)positive;complements C)negative;substitutes D)positive;substitutes E)negative;complements

A 3 percent rise in the price of orange juice decreases the quantity of orange juice demanded by 9 percent and increases the quantity of apple juice demanded by 15 percent.The price elasticity of demand for orange juice is ________.The cross elasticity of demand for apple juice with respect to the price of orange juice is ________. A)-3;5 B)3;5 C)0.33;0.2 D)-0.33;0.2 E)0.33;-5

The elasticity of supply is a units-free measure of the responsiveness of the A)quantity demanded to a change in supply. B)quantity supplied to a change in demand. C)quantity supplied to a change in price. D)price of one good to a change in the quantity supplied of a second good. E)quantity supplied of one good to a change in the price of another good.

Supply is elastic if A)a small percentage change in price results in a large percentage change in quantity supplied. B)a large percentage change in price results in a small percentage change in quantity supplied. C)a small percentage change in demand results in a large percentage change in quantity supplied. D)the good is an inferior good. E)the good is a normal good.

If a large percentage fall in the price of good A results in a small percentage decrease in the quantity supplied,then A)demand is elastic. B)demand is inelastic. C)demand is income inelastic. D)supply is inelastic. E)supply is elastic.

When the price of a t-shirt is $9,the quantity supplied is 9,500.When the price of a t-shirt is $11,the quantity supplied is 10,500.At the price of $10 a t-shirt,the A)supply of t-shirts is elastic. B)supply of t-shirts is inelastic. C)supply of t-shirts is unit elastic. D)demand for t-shirts is elastic. E)supply of t-shirts is perfectly inelastic.

When the price of a DVD is $9,the quantity supplied is 4,000.When the price of a DVD is $11,the quantity supplied is 6,000.What is the elasticity of supply when the price of a DVD is $10? A)0.5 B)0.8 C)1.0 D)2.0 E)20.0

If a 10 percent increase in price increases the quantity supplied by 9 percent, A)the good is a normal good. B)the good is an inferior good. C)supply is unit elastic. D)supply is inelastic. E)supply is elastic.

If a 10 percent increase in price increases the quantity supplied by 18 percent,the elasticity of supply is A)0.3. B)0.6. C)1.2. D)1.8. E)9.0.

Suppose the price of a television set rises by 10 percent.Which one of the following would we expect to be the most elastic following such a price change? A)the momentary supply of television sets B)the short-run supply of television sets C)the long-run supply of television sets D)the momentary demand for television sets E)the normal demand for television sets

A vertical supply curve A)is impossible except in the long run. B)implies an elasticity of supply equal to zero. C)implies an elasticity of supply equal to infinity. D)indicates that suppliers are unwilling to produce the good. E)indicates a shortage of the good.

A horizontal supply curve A)is impossible except in the long run. B)implies an elasticity of supply equal to zero. C)implies an elasticity of supply equal to infinity. D)indicates that suppliers are unwilling to produce the good. E)indicates there is a fixed quantity of the good that can be supplied.

Short-run supply is A)more elastic than momentary supply but less elastic than long-run supply. B)less elastic than momentary supply but more elastic than long-run supply. C)less elastic than both momentary and long-run supply. D)more elastic than both momentary and long-run supply. E)as elastic as either momentary or long-run supply.

Supply is inelastic if A)a small percentage change in price results in a larger percentage change in quantity supplied. B)a large percentage change in price results in a smaller percentage change in quantity supplied. C)the good is a normal good. D)the good is an inferior good. E)the good has many substitutes.

When the price of good A rises from $100 to $120 a unit,the quantity supplied increases from 10,000 to 12,000 units.The elasticity of supply at a price of $110 a unit is A)0.625. B)0.8. C)1.25. D)0.2. E)1.0.

Long-run supply is A)more elastic than momentary supply but less elastic than short-run supply. B)less elastic than momentary supply but more elastic than short-run supply. C)less elastic than both momentary and short-run supply. D)more elastic than both momentary and short-run supply. E)equal in elasticity to short-run supply.

A sudden,end-of-summer heat wave increases the demand for air conditioners and catches suppliers with no reserve inventories.The momentary supply for air conditioners is A)perfectly elastic. B)perfectly inelastic. C)elastic. D)shown by an upward-sloping curve. E)shown by a horizontal curve.

When price rises from $1.50 to $2.50 a unit,the quantity supplied increases from 9,000 to 11,000 units.What is the elasticity of supply when the price is $2 a unit? A)0.4 B)0.8 C)2.5 D)4.0 E)-0.4

The elasticity of supply for airplane travel one year in advance of the departure date is most likely to be A)substantially lower than -1. B)between -1 and zero. C)between zero and 1. D)approximately equal to 1. E)greater than 1.

The elasticity of supply for airplane travel one day in advance of the departure date is most likely to be A)substantially lower than -1. B)between -1 and zero. C)between zero and 1. D)approximately equal to 1. E)greater than 1.

Goods that can be produced using rare productive resources have a ________ elasticity of supply.The greater the amount of time available after a price change,the ________ is the elasticity of supply. A)low;smaller B)high;greater C)high;smaller D)low;greater E)high;more inelastic

You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 percent after one month.Supply of this good is ________.This good is most likely produced using productive resources that are ________. A)inelastic;plentiful or easily obtained B)decreasing;unique or rare C)elastic;plentiful or easily obtained D)unit elastic;unique or rare E)elastic;unique or rare

In the market for farm crops,momentary supply is ________ and short-run supply is ________. A)less elastic than short-run supply;less elastic than long-run supply B)more elastic than short-run supply;more elastic than long-run supply C)perfectly elastic;unit elastic D)unit elastic;perfectly elastic E)perfectly elastic;perfectly inelastic

The demand for corn increases.As a result,the price of corn ________,and the less elastic the supply of corn,the ________ will be the effect on the price. A)falls;smaller B)falls;greater C)rises;smaller D)rises;greater E)does not change;smaller

If the supply curve passes through the origin,then the price elasticity of supply is A)zero. B)1. C)-1. D)greater than 1. E)less than 1 but greater than zero.

When a supply curve A)intersects the origin,the good has an elasticity of supply equal to 1. B)is vertical,the good has an elasticity of supply equal to infinity. C)is horizontal,the good has an elasticity of supply equal to zero. D)intersects the origin,the good has an elasticity of supply equal to zero. E)intersects the origin,the good has an elasticity of supply that is negative.