chapter 4 bank continued. Flashcards
58) The price elasticity of demand for airplane travel one week in advance of the departure date is most likely to be A) equal to infinity. B) equal to zero. C) between zero and 1. D) equal to 1. E) greater than 1.
C
59) If a price decrease results in an increase in total revenue, then demand is A) inelastic. B) unit elastic. C) perfectly inelastic. D) equal to supply. E) elastic.
E
60) 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.
A
61) As a result of a poor growing season, the supply curve of apples shifted leftward, the equilibrium price of apples rose, and total revenue fell. This suggests that the price elasticity of demand for apples is A) perfectly inelastic. B) elastic. C) inelastic. D) unit elastic. E) perfectly elastic.
B
62) Suppose the Nunavut government decides to repair Iqaluit roads. One way to generate sufficient funds for this plan is to increase taxes on gasoline. The government will be able to raise total revenue from gasoline sales only if the demand for gasoline is A) perfectly elastic. B) equal to the supply of gasoline. C) unit elastic. D) inelastic. E) elastic.
D
63) 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 with Nestle strawberry and chocolate ice cream
E
64) Suppose your annual income is $65 000 and your favourite TV Guide magazine costs you $28 a year. Your demand for the TV Guide 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.
B
65) The longer the time that has elapsed since a price change the more time consumers will have to respond to price changes. As a result, demand becomes A) zero. B) more inelastic. C) more elastic. D) perfectly inelastic. E) unit elastic.
C
66) 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 price elasticity of demand 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 price elasticity of demand will be more elastic than it will be a few years after the price change.
c
67) The demand for a good is price elastic if
A) a rise in price results in an increase in total revenue.
B) a fall in price results in a decrease in total revenue.
C) a rise in price results in a decrease in total revenue.
D) the good is a necessity.
E) the demand for the good is very insensitive to changes in price.
C
68) The demand for a good is price inelastic if
A) a rise in price results in an increase in total revenue.
B) a rise in price results in a decrease in total revenue.
C) an increase in income results in a decrease in total revenue.
D) an increase in income results in an increase in total revenue.
E) the good is a luxury.
A
69) If the demand for a good is unit elastic, then a 5 percent increase in price results in
A) a 5 percent increase in total revenue.
B) a 5 percent decrease in total revenue.
C) no change in total revenue.
D) an increase in total revenue greater than 5 percent.
E) an increase in total revenue less than 5 percent.
Answer: C
C
70) Total revenue from the sale of a good will decrease if
A) income increases and the good is normal.
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.
B
71) 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.
D
72) 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, we know the demand for A is elastic.
B) if the total revenue from sales of A rises, we know the demand for A is elastic.
C) if the total revenue from sales of A falls, we know the demand for A is elastic.
D) total revenue will increase because the price of A must rise.
E) total revenue must fall because the quantity bought and sold of A must fall.
C
73) When the price of peanut butter rises by 4 percent, total revenue decreases by 8 percent. The demand for peanut butter A) is elastic. B) is inelastic. C) is unit elastic. D) has a price elasticity equal to 1/2. E) has a price elasticity equal to 2.
A
74) If price elasticity of demand is zero, then as the price falls A) total revenue does not change. B) quantity demanded does not change. C) quantity demanded falls to zero. D) total revenue increases from zero. E) None of the above occurs.
B
76) A decrease in tuition fees will decrease 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.
B
77) The demand for orange juice is price elastic. A severe frost, which destroys large quantities of oranges will
A) lower the equilibrium price but increase total consumer spending on juice.
B) decrease the equilibrium quantity and decrease total consumer spending on juice.
C) decrease both the equilibrium quantity and the price of juice.
D) raise the equilibrium price as well as total consumer spending for juice.
E) raise the equilibrium price but leave total consumer spending for juice constant.
B
78) 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. We can conclude that
A) Tina thinks the demand for CDs has price elasticity of demand 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 should stick to singing and forget about economics.
D
80) If the Canucks lower ticket prices and find that total 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.
C
81) A good has a price elasticity of demand equal to 2. If new imports lower its price from $1.20 to $0.80, the percentage change in quantity demanded will be 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.
A
82) Total revenue is more likely to rise when the price rises if
A) there are few substitutes for the good.
B) a high proportion of income is spent on the good.
C) some extended period of time passes.
D) all of the above.
E) none of the above.
A
83) Total revenue is more likely to rise when the price falls if
A) there are few substitutes for the good.
B) a low proportion of income is spent on the good.
C) some extended period of time passes.
D) all of the above.
E) none of the above.
C
84) 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.
A
85) Suppose the demand curve for good X is horizontal. This shows that the demand for good X is A) unit elastic. B) inelastic. C) perfectly elastic. D) perfect inelastic. E) elastic.
C
86) If the price elasticity of demand is zero, then demand is A) elastic. B) inelastic. C) perfectly inelastic. D) perfectly elastic. E) unit elastic.
C
88) Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent. Such a price rise will induce consumers to 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.
C
91) When the price of a good increased by 5 percent, the quantity demanded of it decreased 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
A
92) When the price of a good increased by 6 percent, the quantity demanded of it decreased 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
A
93) The price elasticity of demand for purses is measured in A) dollars. B) purses. C) dollars per purse. D) purses per dollar. E) none of the above.
E
94) 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.
D
95) 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.
C
96) 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
D
2) 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
E
3) If the quantity of carrots demanded increases by a small percentage when income increases by a large amount, we know that the demand for carrots is A) price elastic. B) price inelastic. C) income inferior. D) income elastic. E) income inelastic.
E
4) If the quantity of carrots demanded increases by a large percentage when income increases by a small amount, we know that the demand for carrots is A) price elastic. B) price inelastic. C) income inferior. D) income inelastic. E) income elastic.
E
5) Which one of the following must be true if demand is income inelastic?
A) A large percentage increase in income will result in a small percentage increase in quantity demanded.
B) A small percentage increase in income will result in a large percentage increase in quantity demanded.
C) An increase in income will decrease the quantity demanded.
D) The good is an inferior good.
E) A percentage rise in price increases the quantity demanded by a smaller percentage.
A
6) Which one of the following must be true if demand is income elastic?
A) A large percentage increase in income will result in a small percentage increase in quantity demanded.
B) A small percentage increase in income will result in a large percentage increase in quantity demanded.
C) An increase in income will decrease the quantity demanded.
D) The good is an inferior good.
E) A percentage change in price will lead to a larger percentage change in quantity demanded.
B
7) If a turnip is an inferior good then
A) a small decrease in income decreases the quantity of turnips demanded at the current price by a large amount.
B) a large decrease in income decreases the quantity of turnips demanded at the current price by a small amount.
C) an increase in income increases the quantity demanded at the current price.
D) an increase in income decreases the quantity demanded at the current price.
E) turnips taste awful.
D
8) If a turnip is a normal good then
A) a small decrease in income increases the quantity of turnips demanded at the current price by a large amount.
B) a large decrease in income increases the quantity of turnips demanded at the current price by a small amount.
C) an increase in income increases the quantity demanded at the current price.
D) an increase in income decreases the quantity demanded at the current price.
E) an increase in price decreases the quantity demanded.
C
9) 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.
C
10) 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.
E
11) 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.
C
12) 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) 0.05. B) 0.8. C) 0.4. D) 1.2. E) 2.0.
C
13) 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
A
14) 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 demand for widgets is negative.
B
15) 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 necessary goods.
D) negative.
E) first positive and then negative as income increases.
A
16) If a 4 percent decrease in income (at a constant price) results in a 2 percent decrease in the consumption of dweedles then
A) the income elasticity of demand for dweedles is negative.
B) dweedles are a necessity and a normal good.
C) dweedles are a luxury and a normal good.
D) dweedles are an inferior good.
E) both A and D.
B
17) 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.
A
18) 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 independent goods.
D
19) 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 independent goods.
C
20) 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) a 4.5 percent increase in the quantity of bison demanded.
B) a 4.5 percent decrease in the quantity of bison demanded.
C) a 2 percent increase in the quantity of bison demanded.
D) a 2 percent decrease in the quantity of bison demanded.
E) a 0.5 percent increase in the quantity of bison demanded.
A
21) 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.
E
22) An economic measure that indicates when the demands for two or more goods are related is A) the income elasticity of demand. B) the price elasticity of demand. C) the substitute elasticity of demand. D) the cross elasticity of demand. E) the normal elasticity of demand.
D
23) If a rise in the price of good B increases the demand for good A, then
A) A and B are substitutes.
B) A and B are complements.
C) the cross elasticity of demand between A and B is negative.
D) A is a resource used in the production of B.
E) the demand for A is price elastic.
A
24) If an increase in the supply of good A increases the demand for good B, then
A) the demands for A and B are independent.
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.
C
25) If an increase in the supply of good A decreases the demand for good B, then
A) the demands for A and B are independent.
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.
D
26) A rise in the price of good A shifts the
A) demand curve for good B rightward if the cross elasticity of demand between A and B is negative.
B) demand curve for good B rightward if the cross elasticity of demand between A and B is positive.
C) supply curve of B rightward if the cross elasticity of demand between A and B is negative.
D) supply curve of B rightward if the cross elasticity of demand between A and B is positive.
E) demand curve for B rightward if the income elasticity of demand for B is positive.
B
27) 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.
B
28) Suppose a fall from $110 to $90 in the price of playing golf on a public golf course results in an increase in the quantity of golf balls demanded (at the current price of golf balls) 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) 0.08. E) 0.05.
A
29) A fall in the price of X from $6 to $4 results in an increase in the quantity of Y demanded (at the current price of Y) from 900 to 1,100 units. What is the cross elasticity of demand between X and Y?
A) 0.5
B) -0.5
C) 2
D) -2
E) Either A or B, depending on whether X and Y are substitutes or complements.
B
30) If good A is a substitute for good B, then the cross elasticity of demand is A) 12. B) infinity. C) positive. D) zero. E) less than zero.
C
31) If good A is a complement of good B, then the cross elasticity of demand is A) 12. B) infinity. C) positive. D) zero. E) negative.
E
35) 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.
C
36) 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.
E
37) Business people speak about cross elasticity of demand without using the actual term. Which one of the following statements reflects cross elasticity of 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) “Since the price of gasoline fell at the neighbouring station, my milk sales have been booming.”
E
38) Business people speak about income elasticity of demand without using the actual term. Which one of the following statements reflects income elasticity of 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) both A and B
D
39) 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.
B
40) If Mr. Brown's income increases by 12 percent and as a result 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.
B
41) When the price of a bicycle falls from $220 to $180 and other things remain the same
I. the quantity of bicycles demanded increases from 150 to 250 an hour.
II. the quantity of skateboards demanded decreases from 125 to 75 an hour.
III. the quantity of bicycle helmets demanded increases from 170 to 230 an hour.
Bicycle helmets and bicycles are ________ because a fall in the price of a bicycle brings ________ in the quantity demanded of bicycle helmets. The cross elasticity of demand for bicycle helmets with respect to bicycles is ________.
A) complements; an increase; -1.5
B) substitutes; a decrease; 1.5
C) substitutes; an increase; -0.67
D) complements; a decrease; 0.67
E) complements; an increase; 1.5
A
42) 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
D
43) When the price of a bicycle falls from $220 to $180 and other things remain the same
I. the quantity demanded of bicycles increases from 150 to 250 an hour
II. the quantity demanded of skateboards decreases from 125 to 75 an hour
III. the quantity demanded of bicycle helmets increases from 170 to 230 an hour.
Skateboards and bicycles are ________ because a fall in the price of a bicycle brings ________ in the quantity demanded of skateboards. The cross elasticity of demand for skateboards with respect to bicycles is ________.
A) complements; an increase; -0.4
B) complements; a decrease; 0.4
C) substitutes; an increase; -2.5
D) substitutes; a decrease; 2.5
E) substitutes; a decrease; 0.4
D
44) 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, the 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.
D
45) If the cross elasticity of demand between two goods is -0.56, then a fall in the price of one good leads to a ________ shift in 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
A
46) 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.
C
47) 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
A
1) 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.
c
2) 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.
A
3) 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.
D
5) If a rise in the price of good A from $9 to $11 results in an increase from 9,500 to 10,500 units supplied, then A) supply is elastic. B) supply is inelastic. C) supply is unit elastic. D) demand is elastic. E) supply is perfectly inelastic.
B
6) If a rise in the price of good A from $9 to $11 results in an increase in quantity supplied from 4,000 to 6,000 units, the elasticity of supply is A) 0.5. B) 0.8. C) 1.0. D) 2.0. E) 20.0.
D
7) If a 10 percent increase in price results in a 9 percent increase in quantity supplied, 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.
D
elasticity of supply is A) 0.3. B) 0.6. C) 1.2. D) 1.8. E) 9.0.
D
9) 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
C
10) 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.
B
11) 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.
C
12) 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 the momentary or the long-run supply.
A
13) Supply is inelastic 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) the good is a normal good.
D) the good is an inferior good.
E) the good has many substitutes.
B
14) If a rise in the price of good A from $100 to $120 results in an increase in quantity supplied from 10,000 to 12,000 units, then the elasticity of supply is A) 0.625. B) 0.8. C) 1.25. D) 0.2. E) 1.0.
E
15) 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) none of the above.
D
16) 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.
B
17) When price rises from $1.50 to $2.50, quantity supplied increases from 9,000 to 11,000 units. What is the price elasticity of supply? A) 0.4 B) 0.8 C) 2.5 D) 4.0 E) -0.4
A
18) Preferences for brussels sprouts increase. The price of brussels sprouts will not change if the price elasticity of A) demand is 0. B) demand is 1. C) supply is 0. D) supply is 1. E) supply is infinity.
E
19) 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) around 1. E) substantially greater than 1.
E
20) 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) around 1. E) substantially greater than 1.
C
21) 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
D
22) 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
C
23) In the market for farm crops momentary supply is ________. In the market for farm crops, 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) negative; positive
D) positive; negative
E) perfectly elastic; perfectly inelastic
A
24) 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) None of the above because the change in the price is effected by the price elasticity of demand.
D
25) 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
B
