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Exam 4: Elasticity

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Question 71

Multiple Choice

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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.

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

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Question 72

Multiple Choice

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A unit elastic demand

A) means that the ratio of a change in quantity demanded to a change in price is equal to 1.
B) means that the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1.
C) means that 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.

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

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Question 73

Multiple Choice

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Use the table below to answer the following question. Table 4.1.4 -Refer to Table 4.1.4.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 ________.

Demand is perfectly inelastic when

If an increase in the supply of good A decreases the demand for good B, then

Use the table below to answer the following questions. Table 4.1.1 Demand schedule for good A. -Refer to Table 4.1.1.If the price of good A falls from $4 to $3,

A union leader who claims that "higher wages increase living standards without causing unemployment" believes that the demand for labour is

Preferences for brussels sprouts increase.The price of brussels sprouts will not change if the price elasticity of

The concept used by economists to indicate the responsiveness of the quantity demanded of a good to a change in its price is the

Suppose a fall in the price of a good from $10 to $8 leads to an increase in quantity demanded from 20 to 24 units.The price elasticity of demand is

If good A is a complement of good B, then the cross elasticity of demand is

Suppose a rise in the price of a good from $6.50 to $7.50 leads to a decrease in the quantity demanded from 10,500 to 9,500 units.In this range of demand, the price elasticity of demand is

The price elasticity of demand for airplane travel one year in advance of the departure date is most likely to be

If a rise in the price of good B increases the demand for good A, then

The demand for a good is perfectly elastic when the price elasticity of demand is

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 ________.

Demand is unit elastic when

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?

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

The price of gasoline rises by 25 percent and remains fixed at the new higher level.Choose the correct statement.