lOMoARcPSD|3928401

Multiple Choice Questions Chapter 4 Elasticity

Economic Principles- Microeconomics (University of Manchester)

StuDocu is not sponsored or endorsed by any college or university

Downloaded by Afrose Khan (afrosekhan72@gmail.com)
 lOMoARcPSD|3928401

Multiple Choice Questions

Elasticity
1) The slope of a demand curve depends on 1) _______
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) neither the units used to measure price nor the units used to
measure quantity.
D) the units used to measure quantity but not the units used to
measure price.

2) The price elasticity of demand depends on 2) _______

A) neither the units used to measure price nor 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 price and the units used to measure
quantity.
D) the units used to measure quantity but not the units used to
measure price.

3) The price elasticity of demand measures 3) _______

A) the responsiveness of the quantity demanded to changes in price.
B) how often the price of a good changes.
C) how sensitive the quantity demanded is to changes in demand.
D) the slope of a budget curve.

4) When the quantity of coal is measured in kilograms instead of tonnes, 4) _______

the demand for coal becomes
A) less elastic. B) more elastic.
C) neither more nor less elastic. D) undefined.

5) The price elasticity of demand equals the 5) _______

A) change in the price divided by the change in quantity demanded.
B) percentage change in the price divided by the percentage change
in the quantity demanded.
C) percentage change in the quantity demanded divided by the
percentage change in the price.
D) change in the quantity demanded divided by the change in price.

6) If a rightward shift of the supply curve leads to a 6 per cent decrease in 6) _______
the price and a 5 per cent increase in the quantity demanded, the price
elasticity of demand is
A) 0.60. B) 0.83. C) 1.20. D) 0.30.

7) A 10 per cent increase in the quantity of spinach demanded results from 7) _______
a 20 per cent decline in its price. The price elasticity of demand for
spinach is
A) 10.0. B) 20.0. C) 2.0. D) 0.5.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

8) A 20 per cent increase in the quantity of pizza demanded results from a 8) _______
10 per cent decline in its price. The price elasticity of demand for pizza is
A) 0.5. B) 20.0. C) 2.0. D) 10.0.

9) Suppose a rise in the price of peaches from £5.50 to £6.50 per kilogram 9) _______
decreases the quantity demanded from 12,500 to 11,500 kilograms. The
price elasticity of demand is
A) 1.0. B) 0.5. C) 1000.0. D) 2.0.

10) A fall in the price of lemons from £10.50 to £9.50 per kilogram increases 10) ______
the quantity demanded from 19,200 to 20,800 kilograms. The price
elasticity of demand is
A) 8.00. B) 1.20. C) 0.80. D) 1.25.

11) A fall in the price of cabbage from £10.50 to £9.50 per kilogram increases 11) ______
the quantity demanded from 18,800 to 21,200 kilograms. The price
elasticity of demand is
A) 1.25. B) 1.20. C) 0.80. D) 8.00.

12) Suppose that the quantity of root beer demanded declines from 103,000 12) ______
litres per week to 97,000 litres per week as a consequence of a 10 per
cent increase in the price of root beer. The price elasticity of demand is
A) 1.40. B) 6.00. C) 1.66. D) 0.60.

13) The price elasticity of demand is 5.0 if a 10 per cent increase in the price 13) ______
results in a ________ decrease in the quantity demanded.
A) 2 percent B) 5 percent
C) 50 percent D) 10 percent

14) A shift of the supply curve of oil raises the price of oil from £9.50 a 14) ______
barrel to £10.50 a barrel and reduces the quantity demanded from 41
million to 39 million barrels a day. The price elasticity of demand for oil
is
A) 2 million barrels a day per pound.
B) 2.0.
C) £1 per 2 million barrels a day.
D) 0.5.

15) Suppose the price elasticity of demand for oil is 0.1. In order to lower 15) ______
the price of oil by 20 per cent, the quantity of oil supplied must be
increased by
A) 200 per cent. B) 0.2 per cent.
C) 20 per cent. D) 2 per cent.

16) The price elasticity of demand for cigarettes is 0.4. If government wants 16) ______
to reduce smoking by 10 per cent, by how much should it aim to raise
the price of cigarettes by imposing a tax?
A) By 10 per cent. B) By 50 per cent.
C) By 25 per cent. D) By 20 per cent.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

17) Suppose the price elasticity of teenager's demand for cigarettes is 2.0. If 17) ______
the government imposes a tax on cigarettes that raises the price by 10
per cent, by how much will it reduce teenage smoking?
A) By 15 per cent. B) By 5 per cent.
C) By 10 per cent. D) By 20 per cent.

Price Quantity demanded

(pounds per kilogram) (kilograms)
8 2,000
7 4,000
6 6,000
5 8,000
4 10,000
3 12,000
18) The table above gives the demand schedule for peas. The price elasticity 18) ______
of demand between £6.00 and £7.00 per kilogram is
A) 2.6. B) 5.0. C) 1.0. D) 2.0.

19) The table above gives the demand schedule for peas. If the price of snow 19) ______
peas falls from £4.00 to £3.00 a kilogram, total revenue will
A) decrease because demand is elastic in this range.
B) increase because demand is inelastic in this range.
C) increase because demand is elastic in this range.
D) decrease because demand is inelastic in this range.

Quantity
Price (pounds demanded
per kilogram) (kilograms)
A 10 0
B 8 4
C 6 8
D 4 12
E 2 16
20) The table above gives the demand schedule for peas. The demand curve 20) ______
for peas is a straight line and so the elasticity of demand is
A) lower at higher prices.
B) higher at higher prices.
C) 1 at all prices.
D) the same at all prices but not 1.

21) The table above gives the demand schedule for peas. As you move from 21) ______
point A to point B, the price elasticity of demand equals
A) 9.00. B) 0.22. C) 0.11. D) 0.50.

22) The table above gives the demand schedule for peas. As you move from 22) ______
point C to point D, the price elasticity of demand is
A) unit elastic. B) 0.75.
C) inelastic. D) 3.00.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

23) The table above gives the demand schedule for peas. Which of the 23) ______
following statements correctly describes the price elasticity of demand?
A) The price elasticity of demand is constant because the slope is
constant.
B) The price elasticity of demand is larger at point A than at point B.
C) The price elasticity of demand increases moving from point A to
point B to point C to point D to point E.
D) The price elasticity of demand is larger at point D than at point A.

24) If demand is price elastic, 24) ______

A) a 1 per cent increase in the price leads to an increase in the
quantity demanded that exceeds 1 per cent.
B) a 1 per cent decrease in the price leads to a decrease in the quantity
demanded that is less than 1 per cent.
C) a 1 per cent decrease in the price leads to an increase in the
quantity demanded that exceeds 1 per cent.
D) the price is very sensitive to any shift of the supply curve.

25) The price elasticity of demand can range between 25) ______
A) zero and infinity. B) negative one and one.
C) negative infinity and D) zero and one.
infinity.

26) Demand is perfectly inelastic when 26) ______

A) shifts of the supply curve results in no change in quantity
demanded.
B) shifts of the supply curve results in no change in the total revenue
from sales.
C) shifts in the supply curve results in no change in price.
D) the good in question has perfect substitutes.

27) If the price elasticity is between 0 and 1, demand is 27) ______

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

28) Demand is inelastic if 28) ______

A) a large change in quantity demanded results in a small change in
price.
B) the price elasticity of demand is greater than 1.
C) the price elasticity of demand is less than 1.
D) the quantity demanded is very responsive to changes in price.

29) A good with a vertical demand curve has a demand with 29) ______
A) infinite elasticity. B) zero elasticity.
C) unit elasticity. D) varying elasticity.

30) When the price elasticity of demand for a good equals 30) ______
A) 1, the demand curve is vertical.
B) 1, the demand curve is horizontal.
C) 0, the demand curve is horizontal.
D) 0, the demand curve is vertical.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

31) A straight line demand curve along which the price elasticity of 31) ______
demand equals 0 is one that
A) forms a 60 degree angle with the horizontal axis.
B) is vertical.
C) is horizontal.
D) forms a 45 degree angle with the vertical axis.

32) The demand for DVDs is unit elastic if 32) ______

A) a 5 per cent decrease in the price leads to an infinite increase in the
quantity demanded.
B) a 5 per cent increase in the price leads to a 5 per cent increase in
total revenue.
C) any increase in the price leads to a 1 per cent decrease in the
quantity demanded.
D) a 5 per cent increase in the price leads to a 5 per cent decrease in
the quantity demanded.

33) Unit elastic demand 33) ______

A) means that the ratio of a change in the quantity demanded to a
change in the price equals 1.
B) means that the ratio of a percentage change in the quantity
demanded to a percentage change in the price equals 1.
C) means that the demand curve is horizontal.
D) means that the demand curve is vertical.

34) A good with a horizontal demand curve has a demand 34) ______
A) for which there are no substitute.
B) with a price elasticity of demand of 0.
C) with a price elasticity of demand of infinity.
D) with an income elasticity of demand of 0.

35) The demand curve in the figure above illustrates the demand for a 35) ______
product with

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

A) unit price elasticity of demand at all prices.

B) infinite price elasticity of demand.
C) zero price elasticity of demand at all prices.
D) a price elasticity of demand that is different at all prices.

36) In the above figure, which demand curve illustrates the demand for a 36) ______
product that has perfectly elastic demand?
A) J. B) I. C) G. D) H.

37) The demand curve in the figure above illustrates a product whose 37) ______
demand has a price elasticity of demand equal to
A) one at all prices.
B) zero at all prices.
C) a different amount at different prices.
D) infinity.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

38) The demand curve in the figure above illustrates the demand for a 38) ______
product with
A) infinite price elasticity of demand.
B) unit price elasticity of demand at all prices.
C) zero price elasticity of demand at all prices.
D) a price elasticity of demand that is different at all prices.

39) On a linear demand curve that intersects both axes, 39) ______
A) the elasticity exceeds 1.00 at all prices.
B) the elasticity decreases as the price falls and quantity increases.
C) the elasticity equals 1.00 at all prices.
D) the elasticity is less than 1.00 at all prices.

40) On a straight line downward sloping demand curve, the maximum 40) ______
elasticity of demand occurs
A) at its vertical intercept.
B) where it intersects the supply curve.
C) at its horizontal intercept.
D) at its midpoint.

41) A straight line demand curve with negative slope intersects the 41) ______
horizontal axis at 100 tons per week. At the midpoint on the demand
curve (corresponding to 50 tons per week) the price elasticity of demand
is
A) 0.5.
B) 0.
C) 1.0.
D) unknown without more information.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

42) Which of the following statements is FALSE? 42) ______

A) A good with a horizontal demand curve has a perfectly elastic
demand.
B) A good with a straight line, downward sloping demand curve has
a demand whose elasticity is constant.
C) A good with a vertical demand curve has a perfectly inelastic
demand.
D) All of the above statements are false.

43) Along a straight line demand curve, as the price falls the 43) ______
A) elasticity of demand is constant.
B) demand becomes less elastic.
C) demand becomes more elastic.
D) demand is always unitary elastic.

44) The price elasticity of demand always ________ in value when moving 44) ______
down along a downward sloping ________ line demand curve.
A) rises; straight B) falls; straight
C) falls, curved D) rises; curved

45) The elasticity of demand along a straight line, negatively sloped, 45) ______
demand curve is
A) always equal to 1.0.
B) infinite.
C) equal to 0.
D) changes continuously moving along the demand curve.

46) If the demand curve for a good is a downward sloping straight line, the 46) ______
demand for the good will be more price elastic the higher is the
A) income of consumers.
B) price of substitutes.
C) income elasticity of demand for that good.
D) price of the good.

47) If the demand curve for a good is a downward sloping straight line, 47) ______
then at which of the following prices is the elasticity of demand the
largest?
A) £2/unit.
B) £1/unit.
C) £3/unit.
D) It is impossible to determine at which price the demand will be
most elastic without more information.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

48) The figure above illustrates a linear demand curve. By comparing the 48) ______
price elasticity in the £2 to £4 price range with the elasticity in the £8 to
£10 range, you can conclude that the elasticity is
A) greater in the £2 to £4 range.
B) greater in the £8 to £10 range.
C) the same in both price ranges.
D) greater in the £8 to £10 range when the price rises but greater in
the £2 to £4 range when the price falls.

49) The figure above illustrates a linear demand curve. If the price falls from 49) ______
£8 to £6,
A) total revenue decreases.
B) total revenue increases.
C) the quantity demanded increases by less than 20 per cent.
D) total revenue remains unchanged.

50) The figure above illustrates a linear demand curve. In the range from £8 50) ______
to £6,
A) the demand is price inelastic.
B) the demand is price elastic.
C) the demand is unit elastic.
D) more information is needed to determine if the demand is price
elastic, unit elastic, or inelastic.

51) The figure above illustrates a linear demand curve. If the price falls from 51) ______
£6 to £4,
A) total revenue decreases.
B) the quantity demanded increases by more than 100 per cent.
C) total revenue increases.
D) total revenue remains unchanged.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

52) The figure above illustrates a linear demand curve. In the price range 52) ______
from £8 to £6, demand is ________ and in the price range £4 to £2,
demand is ________.
A) elastic; elastic B) inelastic; elastic
C) elastic; inelastic D) inelastic; inelastic

53) The figure above illustrates a linear demand curve. If the price rises 53) ______
from £6 to £8 demand is ________ and if the price falls from £8 to £6
demand is ________.
A) inelastic; inelastic B) elastic; inelastic
C) elastic; elastic D) inelastic; elastic

54) The demand curve in the figure above illustrates the demand for a 54) ______
product with a price elasticity of demand
A) equal to infinity at all prices. B) that is different at all prices.
C) equal to one at all prices. D) equal to zero at all prices.

55) A straight line demand curve with negative slope intersects the 55) ______
horizontal axis at 200 tons per week. The point on the demand curve at
which the price elasticity of demand is 1 corresponds to a quantity
demanded
A) of 0 tons.
B) that would be negative if a negative quantity demanded were
possible.
C) of 200 tons.
D) of 100 tons.

56) Demand is inelastic if 56) ______

A) the smaller angle between the vertical axis and the demand curve
is less than 45 degrees.
B) large shifts of the supply curve lead to only small changes in price.
C) the good in question has close substitutes.
D) a leftward shift of the supply curve raises the total revenue.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

57) Demand is unit elastic when 57) ______

A) the slope of the demand curve is 1.
B) a change in the price of the product leads to no change in the total
revenue.
C) a shift of the supply curve leads to no change in price.
D) a shift of the supply curve leads to an equal shift of the demand
curve.

58) Producers' total revenue will decrease if 58) ______

A) the price rises and demand is inelastic.
B) income falls and the good is an inferior good.
C) the price rises and demand is elastic.
D) income increases and the good is a normal good.

59) Producers' total revenue will increase if 59) ______

A) income falls and the good is a normal good.
B) income increases and the good is an inferior good.
C) the price rises and demand is inelastic.
D) the price rises and demand is elastic.

60) If the demand for a good is unit elastic, 60) ______

A) a 5 per cent increase in price results in a 5 per cent increase in total
revenue.
B) a 5 per cent increase in price does not change total revenue.
C) a 5 per cent increase in price results in a 5 per cent decrease in total
revenue.
D) the demand curve is a straight line with slope of 1.

61) If OPEC, a group of oil producing nations, cuts its oil production to 61) ______
increase its total revenue, OPEC presumes that the demand for oil is
A) unit elastic. B) inelastic.
C) elastic. D) perfectly elastic.

62) A shift of the supply curve of oil raises the price from £10 a barrel to £30 62) ______
a barrel and reduces the quantity demanded from 40 million to 23
million barrels a day. You can conclude that the
A) supply of oil is elastic. B) supply of oil is inelastic.
C) demand for oil is elastic. D) demand for oil is inelastic.

63) A shift of the supply curve of oil raises the price from £10 a barrel to £15 63) ______
a barrel and reduces the quantity demanded from 40 million to 15
million barrels a day. You can conclude that the
A) demand for oil is inelastic. B) demand for oil is elastic.
C) supply of oil is inelastic. D) supply of oil is elastic.

64) A leftward shift of the supply curve of cookies raises the price of a 64) ______
cookie from 10 pence to 20 pence and decreases the quantity demanded
from 700,000 to 500,000. You can conclude that
A) the demand for cookies is inelastic.
B) the demand for cookies is elastic.
C) the supply of cookies is elastic.
D) the supply of cookies is inelastic.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

65) The demand for a good is elastic if 65) ______

A) the good is a necessity.
B) an increase in its price results in an increase in total revenue.
C) an increase in its price results in a decrease in total revenue.
D) a decrease in its price results in a decrease in total revenue.

66) The figure above represents the behaviour of total revenue as price falls 66) ______
along a straight line demand curve. What is the price elasticity of
demand if total revenue is given by point f ?
A) Demand is elastic. B) Demand is unit elastic.
C) Demand is inelastic. D) It is impossible to
determine.

67) The figure above represents the behaviour of total revenue as price falls 67) ______
along a straight line demand curve. Unit elasticity of demand occurs at
A) point i. B) point j. C) point h. D) point g.

68) As the price of camcorders fell during the last decade, consumers' total 68) ______
expenditures on camcorders increased. This fact means that the demand
for camcorders
A) is elastic. B) is inelastic.
C) must have shifted leftward. D) must be upward sloping.

69) If your demand for petrol is inelastic, when the price of petrol falls, 69) ______
which of the following will occur?
A) Your total expenditure on petrol will decrease.
B) Your total expenditure on petrol will increase.
C) Your demand curve for petrol will shift leftward.
D) Your demand curve for petrol will shift rightward.

70) Starting at the top of a straight line downward sloping demand curve, 70) ______
as the price falls, total expenditures will
A) initially increase and then decrease.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

B) increase along the entire demand curve.

C) initially decrease and then increase.
D) decrease along the entire demand curve.

71) If a price decrease results in your expenditure on a good decreasing, 71) ______
your demand must be
A) linear. B) inelastic. C) unit. D) elastic.

72) An increase in subway fares in New York City will boost your 72) ______
expenditures on subway rides if
A) your demand for subway rides is elastic.
B) the supply of subway rides is elastic.
C) your demand for subway rides is inelastic.
D) the supply of subway rides is inelastic.

73) The more substitutes available for a good or service, the 73) ______
A) smaller is its income elasticity of demand.
B) larger is its income elasticity of demand.
C) smaller is its price elasticity of demand.
D) larger is its price elasticity of demand.

74) Of the following, demand is likely to be the least elastic for 74) ______
A) Ford automobiles. B) MP3 players.
C) toothpicks. D) vacations in France.

75) Of the following, demand is likely to be the least elastic for 75) ______
A) insulin for diabetics. B) pink grapefruit.
C) diamonds. D) iceberg lettuce.

76) The demand for food is most elastic in countries 76) ______
A) with low income levels.
B) that are highly urbanized.
C) with high income levels.
D) with intermediate income levels.

77) The demand for a Volkswagen Bora is probably 77) ______

A) inelastic but more elastic than the demand for automobiles.
B) elastic but less elastic than the demand for automobiles.
C) inelastic and less elastic than the demand for automobiles.
D) elastic and more elastic than the demand for automobiles.

78) The route from London to Mexico City is served by more than one 78) ______
airline. The demand for tickets from British Airways for that route is
probably
A) inelastic and less elastic than the demand for all tickets for that
route.
B) inelastic but more elastic than the demand for all tickets for that
route.
C) elastic and more elastic than the demand for all tickets for that
route.
D) elastic but less elastic than the demand for all tickets for that route.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

79) The elasticity of demand for Dell computers is probably 79) ______
A) elastic and smaller than the elasticity of demand for computers
overall.
B) inelastic and smaller than the elasticity of demand for computers
overall.
C) inelastic but larger than the elasticity of demand for computers
overall.
D) elastic and larger than the elasticity of demand for computers
overall.

80) Aglets are the metal or plastic tips on shoelaces that make it easier to 80) ______
lace your shoes. The demand for aglets is probably
A) elastic but not perfectly elastic.
B) unit elastic.
C) perfectly elastic.
D) inelastic.

81) The cross elasticity of demand measures the responsiveness of the 81) ______
quantity demanded of a particular good to changes in the prices of
A) its complements but not its substitutes.
B) its substitutes but not its complements.
C) its substitutes and its complements.
D) neither its substitutes nor its complements.

82) If goods are complements, definitely their 82) ______

A) income elasticities are negative.
B) income elasticities are positive.
C) cross elasticities are negative.
D) cross elasticities are positive.

83) If a rise in the price of good 1 decreases the quantity of good 2 83) ______
demanded,
A) good 1 is an inferior good.
B) the cross elasticity of demand is negative.
C) the cross elasticity of demand is positive.
D) good 2 is an inferior good.

84) The cross elasticity of demand between apples and oranges is defined as 84) ______
the
A) change in the quantity of apples demanded divided by the change
in the quantity of oranges demanded.
B) price elasticity of demand for apples divided by the price elasticity
of demand for oranges.
C) percentage change in the quantity of apples demanded divided by
the percentage change in the quantity of oranges demanded.
D) percentage change in the quantity of apples demanded divided by
the percentage change in the price of oranges.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

85) If the cross elasticity of demand between goods A and B is positive, 85) ______
A) the demands for A and B are both price elastic.
B) A and B are substitutes.
C) A and B are complements.
D) the demands for A and B are both price inelastic.

86) If the cross elasticity of demand between goods A and B is negative, 86) ______
A) A and B are substitutes.
B) A and B are complements.
C) the demands for A and B are both price inelastic.
D) the demands for A and B are both price elastic.

87) The greater the substitutability between Northwest timber/wood and 87) ______
Southeast timber/wood, the ________ is the cross elasticity of demand
between timber/wood from the two regions and the ________ is the
price elasticity of demand for Northwest timber/wood.
A) larger; larger B) smaller; smaller
C) larger; smaller D) smaller; larger

88) If goods A and B are complements, then 88) ______

A) their income elasticities of demand are both greater than 1.
B) the cross elasticity of demand between A and B is negative.
C) the cross elasticity of demand between A and B is positive.
D) their income elasticities of demand are both less than 1.

89) If a rise in the price of good B increases the quantity demanded of good 89) ______
A, then
A) A is a substitute for B, but B is a complement to A.
B) B is a substitute for A, but A is a complement to B.
C) A and B are substitutes.
D) A and B are complements.

90) If a fall in the price of good A increases the quantity demanded of good 90) ______
B, then
A) A and B are substitutes.
B) A is a substitute for B, but B is a complement to A.
C) B is a substitute for A, but A is a complement to B.
D) A and B are complements.

91) The cross elasticity of demand between Coca Cola and Pepsi Cola is 91) ______
________ so that Coke and Pepsi are ________.
A) negative; substitutes B) negative; complements
C) positive; substitutes D) positive; complements

92) A rise in the price of good A shifts the 92) ______

A) demand curve for good B rightward if the cross elasticity of
demand between A and B is positive.
B) supply curve of good B rightward if the cross elasticity of demand
between A and B is negative.
C) demand curve for good B rightward if the cross elasticity of
demand between A and B is negative.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

D) supply curve of good B rightward if the cross elasticity of demand

between A and B is positive.

93) The income elasticity of demand is the percentage change in ________ 93) ______
divided by the percentage change in ________.
A) the quantity demanded; income
B) income; the price
C) income; the quantity demanded
D) the price; income

94) Demand is income elastic if 94) ______

A) an increase in income does not affect the quantity demanded.
B) a large percentage increase in income results in a small percentage
increase in the quantity demanded.
C) the good in question has close substitutes.
D) a small percentage increase in income results in a large percentage
increase in the quantity demanded.

95) The income elasticity of demand is largest for 95) ______

A) food, such as fresh meat. B) luxuries.
C) shelter. D) clothing.

96) To say that turnips are inferior goods means that the income elasticity is 96) ______
A) positive but could be greater than or less then (or equal to) 1.
B) definitely between 0 and 1.
C) negative.
D) definitely greater than 1.

97) An increase in Abigail's income decreases her demand for cassette tapes. 97) ______
For her, cassette tapes are
A) a substitute good. B) an inferior good.
C) a normal good. D) a complement to any good.

98) Goods whose income elasticities are negative are called 98) ______
A) inferior goods. B) superior goods.
C) normal goods. D) complements.

99) A 10 per cent increase in income results in a 5 per cent decrease in the 99) ______
quantity demanded. The income elasticity is
A) 0.5. B) 0.5. C) 2.0. D) 2.0.

100) Deb's income has just risen from £350 per week to £450 per week. As a 100) _____
result, she decides to increase the number of movies she attends each
month by 5 per cent. Her demand for movies is
A) income elastic.
B) represented by a horizontal line.
C) represented by a vertical line.
D) income inelastic.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

101) Fred's income has just risen from £940 per week to £1,060 per week. As a 101) _____
result, he decides to purchase 9 per cent more steak per week. The
income elasticity of Fred's demand for steak is
A) 1.33. B) 1.00. C) 0.75. D) 0.90.

102) Joan's income has just risen from £940 per week to £1,060 per week. As a 102) _____
result, she decides to purchase 12 per cent more lettuce per week. The
income elasticity of Joan's demand for lettuce is
A) 1.00. B) 1.33. C) 0.90. D) 0.75.

103) A 10 per cent increase in income increases the quantity of orange juice 103) _____
demanded from 19,200 to 20,800 gallons. The income elasticity of
demand for orange juice is
A) 0.5. B) 1.2. C) 1.0. D) 0.8.

104) A 10 per cent increase in income increases the quantity of apple juice 104) _____
demanded from 18,800 to 21,200 gallons. The income elasticity of
demand for apple juice is
A) 0.8. B) 0.5. C) 1.0. D) 1.2.

105) The increase in the demand for widgets, shown in the figure above, is 105) _____
the result of an increase in the price of McBoover devices. Therefore,
A) widgets are a normal good.
B) McBoover devices are a normal good.
C) widgets and McBoover devices are complements.
D) widgets and McBoover devices are substitutes.

106) The increase in the demand for widgets, shown in the figure above, is 106) _____
the result of a decrease in the price of McBoover devices. Therefore,
A) widgets and McBoover devices are complements.
B) widgets and McBoover devices are substitutes.
C) McBoover devices are a normal good.
D) widgets are a normal good.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

107) The increase in the demand for widgets, shown in the figure above, is 107) _____
the result of an increase in the price of McBoover devices from £9 to £11.
Therefore, the cross price elasticity for these two products is
A) 2.0. B) 0.5. C) 2.0. D) 0.5.

108) The increase in the demand for widgets, shown in the figure above, is 108) _____
the result of a decrease in the price of McBoover devices from £11 to £9.
Therefore, the cross price elasticity for these two products is
A) 0.5. B) 0.5. C) 2.0. D) 2.0.

109) The increase in the demand for widgets, shown in the figure above, is 109) _____
the result of an increase in income. Therefore, widgets are
A) a normal good. B) inelastically demanded.
C) elastically demanded. D) an inferior good.

110) The increase in the demand for widgets, shown in the figure above, is 110) _____
the result of an increase in people's incomes from £28,500 per year to
£31,500 per year. Therefore, the income elasticity of demand for widgets
is
A) 0.25. B) 0.75. C) 4.00. D) 1.33.

111) Looking at different nations shows that as income rises, the share of 111) _____
income spent on food
A) rises.
B) falls.
C) remains constant at 33 per cent.
D) remains constant at 15 per cent.

112) The elasticity of supply measures the responsiveness of the 112) _____
A) quantity demanded to changes in supply.
B) quantity supplied to changes in demand.
C) quantity supplied to changes in income.
D) quantity supplied to changes in price.

113) The elasticity of supply measures the sensitivity of 113) _____

A) quantity supplied to a change in price.
B) supply to changes in costs.
C) quantity supplied to quantity demanded.
D) price to changes in supply.

114) On most days the price of a rose is £1 and 80 roses are purchased. On 114) _____
Valentine's Day the demand increases so that the price of a rose rises to
£2 and 320 roses are purchased. Therefore, the price elasticity of
A) demand for roses is about 1.8.
B) supply of roses is about 1.8.
C) demand for roses is about 0.55.
D) supply of roses is about 0.55.

115) Supply is elastic if 115) _____

A) the slope of the supply curve is positive.
B) a 1 per cent change in price leads to a larger percentage change in
quantity supplied.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

C) the good in question is a normal good.

D) a 1 per cent change in price leads to a smaller percentage change in
quantity supplied.

116) If a 1 per cent decrease in the price of a bushel of oranges results in a 116) _____
smaller percentage decrease in the quantity supplied,
A) supply is inelastic. B) supply is elastic.
C) demand is elastic. D) demand is inelastic.

117) If a 1 per cent decrease in the price of a bushel of squash results in a 117) _____
larger percentage decrease in the quantity supplied,
A) demand is inelastic. B) supply is inelastic.
C) supply is elastic. D) demand is elastic.

118) If at a given moment, no matter what the price, producers cannot 118) _____
change the quantity supplied, the momentary supply
A) does not exist. B) has unit elasticity.
C) has infinite elasticity. D) has zero elasticity.

119) If a rise in the price of oranges from £7 to £9 a bushel, caused by a shift 119) _____
of the demand curve, increases the quantity of bushels supplied from
4,500 to 5,500 bushels, the
A) demand for oranges is inelastic.
B) supply of oranges is elastic.
C) demand for oranges is elastic.
D) supply of oranges is inelastic.

120) If a shift in the demand curve that raises the price of oranges from £7 to 120) _____
£9 a bushel increases the quantity of oranges supplied from 4,000
bushels to 6,000 bushels, the
A) supply of oranges is elastic.
B) supply of oranges is inelastic.
C) demand for oranges is inelastic.
D) demand for oranges is elastic.

121) A rise in the price of cabbage from £14 to £18 per bushel, caused by a 121) _____
shift of the demand curve, increases the quantity supplied from 4,000 to
6,000 bushels. The elasticity of supply is
A) 0.6. B) 1.6. C) 0.8. D) 1.0.

122) If a 5 per cent increase in the price results in a 9 per cent increase in 122) _____
quantity supplied, the elasticity of supply is
A) 1.80. B) 0.55. C) 1.20. D) 0.30.

123) If a 5 per cent increase in price results in a 3 per cent increase in the 123) _____
quantity supplied, the elasticity of supply is
A) 1.20. B) 1.66. C) 0.30. D) 0.60.

124) A vertical supply curve indicates an elasticity of supply that equals 124) _____
A) 1. B) infinity. C) 1. D) 0.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

125) A horizontal supply curve indicates an elasticity of supply that equals 125) _____
A) 1. B) 1. C) infinity. D) 0.

126) In the above figure, the price elasticity of supply at any given quantity is 126) _____
A) highest along S1, next highest along S2, and lowest along S3.
B) equal to one on each of the three supply curves.
C) highest along S3, next highest along S2, and lowest along S1.
D) equal to zero on each of the three supply curves.

127) The elasticity of supply for paintings by Monet (a dead painter) is 127) _____
A) unit elastic. B) inelastic.
C) perfectly elastic. D) perfectly inelastic.

128) If the elasticity of supply of a good is zero, then its 128) _____
A) supply curve is horizontal.
B) supply curve is vertical.
C) supply curve is positively sloped.
D) demand curve must be vertical.

129) Which of the following leads a good to have a high elasticity of supply? 129) _____
I. The good must be produced using unique resources.
II. The good is produced using commonly available resources.
A) II only. B) I only.
C) I and II. D) Neither I nor II.

130) The elasticity of supply is ________ and the elasticity of supply is 130) _____
generally larger in the ________.
A) negative; short run B) positive; long run
C) negative; long run D) positive; short run

Downloaded by Afrose Khan (afrosekhan72@gmail.com)

 lOMoARcPSD|3928401

131) If a good is produced using inputs for which there are no substitutes, 131) _____
the good's
A) elasticity of demand will be large.
B) elasticity of supply is likely to be large.
C) elasticity of demand will be small.
D) elasticity of supply is likely to be small.

132) A determinant of the price elasticity of supply is the extent to which 132) _____
A) the good has many consumer substitutes.
B) consumers like the quality of the good.
C) the demand for the good is relatively elastic.
D) production of the good uses commonly available resources.

133) A given change in demand will yield a larger change in the quantity 133) _____
supplied
A) the longer the time frame under consideration.
B) the more plentiful are the resources necessary to produce the good.
C) the more elastic is supply.
D) All of the above answers are correct.

134) The elasticity of the momentary supply curve for any good 134) _____
A) is necessarily equal to one.
B) is necessarily equal to zero.
C) is necessarily equal to positive infinity.
D) None of the above answers is correct.

135) In general, the momentary supply curve for an agricultural product is 135) _____
________ than the ________ supply curve.
A) less elastic; long run
B) more elastic; long run
C) flatter; short run
D) None of the above answers is correct.

Downloaded by Afrose Khan (afrosekhan72@gmail.com)