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Suppose the demand curve for hybrid cars shifts to the right.This will cause a relatively small increase in the price of hybrid cars if:


A) demand is elastic and supply is inelastic.
B) demand is inelastic and supply is elastic.
C) both demand and supply are inelastic.
D) both demand and supply are elastic.

E) None of the above
F) C) and D)

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The absolute value of the price elasticity of demand for telescopes is 1.5.Therefore, telescopes can be classified as a luxury.

A) True
B) False

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To calculate the price elasticity of demand we divide________.


A) the percentage change in quantity demanded by the percentage change in price.
B) the percentage change in price by the percentage change in quantity demanded.
C) rise by the run.
D) the average price by the average quantity demanded.

E) B) and C)
F) All of the above

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


A) The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope.
B) If quantity demanded changes by a larger percentage than the percentage change in price, demand is elastic.
C) The value of the price elasticity of demand along a downward-sloping demand curve is always negative.
D) A linear downward-sloping demand curve has a varying price elasticity coefficient.

E) B) and C)
F) C) and D)

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Suppose the current price of oil is $90 a barrel and the quantity supplied is 800 million barrels per day.If the price elasticity of supply for oil in the short run is estimated at 0.5, use the midpoint formula to calculate the percentage change in quantity supplied when the price of oil rises to $98 a barrel. __________________________________________________________________________________________________________________________________________________________________________________________

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The percentage change in quant...

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Which of the following statements is true?


A) If the price of a good is lowered and total revenue decreases, demand is elastic.
B) If the price of a good is raised and total revenue does not change, demand is perfectly elastic.
C) If the price of a good is raised and total revenue increases, demand is inelastic.
D) If the price of a good is lowered and total revenue increases, demand is inelastic.

E) All of the above
F) None of the above

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


A) 2; The product is elastic.
B) 0) 2; The product is inelastic.
C) 0) 5; The product is inelastic.
D) 50%; The product is inelastic.

E) A) and B)
F) B) and D)

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If demand is inelastic, the absolute value of the price elasticity coefficient is greater than one.

A) True
B) False

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The midpoint formula is used to measure the elasticity of demand between two points on a demand curve________.


A) when demand is elastic.
B) in special cases when the percentage change in the quantity demanded is equal to the percentage change in price.
C) to ensure that the elasticity has a negative value.
D) to ensure that we have only one value of the price elasticity of demand between two points on a demand curve.

E) All of the above
F) B) and D)

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Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

A) True
B) False

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Which of the following correctly comments on the following statement? 'The only way to increase the revenue from selling a product is to increase the product's price.'


A) It is not true.Revenue will increase as the price of the product increases only if demand is elastic.
B) This statement is not true.Revenue will increase as the price of the product increases only if demand is inelastic.
C) The statement is true.
D) This statement is not true.Revenue will decrease as the price of the product increases because quantity demanded will fall.

E) A) and B)
F) A) and C)

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Figure 4.7 Figure 4.7 -Refer to Figure 4.7.A unit-elastic supply curve is shown in: A) Panel A. B) Panel B. C) Panel C. D) Panel D. -Refer to Figure 4.7.A unit-elastic supply curve is shown in:


A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.

E) B) and D)
F) A) and C)

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If, for a given percentage increase in price, quantity supplied increases by a proportionately larger percentage, then supply is:


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

E) A) and B)
F) None of the above

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Suppose at the current price, the demand for copper is estimated at -3.14.What happens to sales revenue if the government imposes a price ceiling below the free market equilibrium price in the copper market?


A) Sales revenue falls.
B) Sales revenue rises.
C) Sales revenue remains unchanged because copper is a necessity for most industries.
D) It cannot be determined without information on prices.

E) B) and D)
F) All of the above

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A private school is considering increasing its tuition to raise revenue.If the school believes that raising tuition will increase revenue,


A) it is assuming that the demand for attending the school is inelastic.
B) it is assuming that the demand for attending the school is elastic.
C) it is assuming that the demand for attending the school is unit-elastic.
D) it is assuming that the demand for attending the school is perfectly elastic.

E) B) and D)
F) None of the above

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If the price elasticity of demand for insulin is equal to zero, then what is the demand curve for insulin?


A) Horizontal
B) Downward sloping
C) Curvilinear
D) Vertical

E) None of the above
F) A) and B)

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Suppose the demand for milk is relatively inelastic.What happens to sales revenue if the government imposes a price floor above the free market equilibrium price in the market for milk?


A) Sales revenue falls.
B) Sales revenue rises.
C) Sales revenue remains unchanged.
D) It cannot be determined without information on prices.

E) A) and D)
F) A) and C)

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


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

E) A) and B)
F) C) and D)

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Jaycee Jeans sold 40 pairs of jeans at a price of $40.When it lowered its price to $20, the quantity sold increased to 60 pairs.Calculate the absolute value of the price elasticity of demand.Use the midpoint formula.


A) 1) 67
B) 1) 0
C) 0) 6
D) 0) 53

E) A) and D)
F) C) and D)

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If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because:


A) buyers of steel are more sensitive to a price change if they have more time to adjust to the price change.
B) buyers of steel are less sensitive to a price change if they have more time to adjust to the price change.
C) sales revenue in the building industry will fall sharply.
D) profits will fall by a greater amount in the long run than in the short run.

E) A) and C)
F) B) and C)

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