Quiz 5 - Elasticity

Question 1

The cross elasticity of demand between any two goods is defined as the
Select one:
a. change in the price elasticity of demand for one good divided by the change in the price elasticity of demand for the other good.
b. percentage change in the quantity of a good demanded divided by the percentage change in its price.
c. percentage change in the price of one good divided by the percentage change in the price of the other good.
d. percentage change in the quantity of a good demanded divided by the percentage change in income.
e. percentage change in the quantity demanded of one good divided by the percentage change in the price of the other good.

Answer 1

E

Question 2

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
Select one:
a. Tina thinks the demand for CDs is price elastic and Brian thinks it is price inelastic.
b. Tina thinks the demand for CDs has price elasticity of demand zero and Brian thinks price elasticity of demand equals 1.
c. Tina and Brian should stick to singing and forget about economics.
d. Tina thinks the demand for CDs has price elasticity of demand equal to 1 and Brian thinks price elasticity of demand equals zero.
e. Tina thinks the demand for CDs is price inelastic and Brian thinks it is price elastic.

Answer 2

E

Question 3

In the market for farm crops momentary supply is ________. In the market for farm crops, short-run supply is ________.
Select one:
a. perfectly elastic; perfectly inelastic
b. positive; negative
c. negative; positive
d. less elastic than short-run supply; less elastic than long-run supply
e. more elastic than short-run supply; more elastic than long-run supply

Answer 3

D

Question 4

The price elasticity of demand for airplane travel one year in advance of the departure date is most likely to be
Select one:
a. equal to infinity.
b. equal to 1.
c. equal to zero.
d. greater than 1. 
e. between zero and 1.

Answer 4

D

Question 5

The income elasticity of demand equals the percentage change in ________ other things remaining the same.
Select one:
a. price divided by the percentage change in income
b. quantity demanded divided by the percentage change in price
c. quantity demanded divided by the percentage change in income
d. price divided by the percentage change in quantity demanded
e. income divided by the percentage change in quantity demanded

Answer 5

C

Question 6

Factors that influence the elasticity of demand include
Select one:
a. preferences.
b. the price of complements but not the price of substitutes.
c. income.
d. the closeness of substitutes.
e. the price of substitutes and complements.

Answer 6

D

Question 7

The price elasticity of demand for airplane travel one year in advance of the departure date is most likely to be
Select one:
a. equal to infinity.
b. equal to 1.
c. equal to zero.
d. greater than 1. 
e. between zero and 1.

Answer 7

D

Question 8

If an increase in the supply of good A decreases the demand for good B, then
Select one:
a. the elasticity of supply for good A is greater than 1.
b. the demands for A and B are independent.
c. A and B are substitutes.
d. A and B are complements.
e. the demand for A is price elastic.

Answer 8

C