parkin chapter 04testbank econ1000.docx

parkin chapter 04testbank econ1000.docx

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parkinchapter04testbankecon1000

Chapter4Elasticity

4.1PriceElasticityofDemand

1）Apriceelasticityofdemandof2meansthata10percentincreaseinpricewillresultina

A）2percentdecreaseinquantitydemanded.

B）20percentdecreaseinquantitydemanded.

C）5percentdecreaseinquantitydemanded.

D）2percentincreaseinquantitydemanded.

E）20percentincreaseinquantitydemanded.

Answer:

B

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

2）Thepriceelasticityofdemandisaunits-freemeasureoftheresponsivenessofthe________whenallotherinfluencesonbuyingplansremainthesame.

A）quantitydemandedtoachangeinthepriceofasubstituteorcomplement

B）quantitydemandedtoachangeinincome

C）quantitydemandedofagoodtoachangeinitsprice

D）pricetoachangeinquantitydemanded

E）noneoftheabove

Answer:

C

Diff:

1Type:

MC

Topic:

PriceElasticityofDemand

3）Theconceptusedbyeconomiststoindicatetheresponsivenessofthequantitydemandedofagoodtoachangeinitspriceisthe

A）crosselasticityofdemand.

B）incomeelasticityofdemand.

C）substituteelasticityofdemand.

D）priceelasticityofdemand.

E）elasticityofsupply.

Answer:

D

Diff:

1Type:

MC

Topic:

PriceElasticityofDemand

4）Ifa10percentriseinpriceleadstoan8percentdecreaseinquantitydemanded,thepriceelasticityofdemandis

A）0.8.

B）1.25.

C）8.

D）0.125.

E）80.

Answer:

A

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

5）Ifalargepercentagedropinthepricelevelresultsinasmallpercentageincreaseinthequantitydemanded,

A）demandisinelastic.

B）demandiselastic.

C）demandisunitelastic.

D）thepriceelasticityofdemandisclosetoinfinity.

E）thepriceelasticityofdemandiszero.

Answer:

A

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

6）Thepriceofapplesfallsby5percentandquantityofapplesdemandedincreasesby6percent.Weconcludethatthedemandforapplesis

A）perfectlyelastic.

B）unitelastic.

C）elastic.

D）perfectlyinelastic.

E）inelastic.

Answer:

C

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

7）Thepriceoforangesrisesby3percentandquantityoforangesdemandeddecreasesby3percent.Weconcludethatthedemandfororangesis

A）inelastic.

B）elastic.

C）perfectlyinelastic.

D）perfectelastic.

E）unitelastic.

Answer:

E

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

8）Thepriceofplumsfallsby7percentandquantityofplumsdemandedincreasesby6.75percent.Weconcludethatthedemandforplumsis

A）inelastic.

B）perfectlyelastic.

C）perfectlyinelastic.

D）elastic.

E）unitelastic.

Answer:

A

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

9）ThepriceofgoodAfallsby10percentandquantityofgoodAdemandeddoesnotchange.WeconcludethatthedemandforgoodAis

A）perfectlyelastic.

B）inelastic.

C）perfectlyinelastic.

D）elastic.

E）unitelastic.

Answer:

C

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

10）Whichoneofthefollowingillustratesaninelasticdemand?

A）A10percentriseinpriceleadstoa5percentdecreaseinquantitydemanded.

B）A10percentriseinpriceleadstoa20percentdecreaseinquantitydemanded.

C）Apriceelasticityofdemandequaltoinfinity.

D）Apriceelasticityofdemandequalto1.0.

E）Apriceelasticityofdemandequalto2.0.

Answer:

A

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

11）Whichoneofthefollowingillustratesanelasticdemand?

A）A10percentriseinpriceleadstoa5percentdecreaseinquantitydemanded.

B）A10percentriseinpriceleadstoa20percentdecreaseinquantitydemanded.

C）Apriceelasticityofdemandequalto0.2.

D）Apriceelasticityofdemandequalto1.0.

E）Apriceelasticityofdemandequaltozero.

Answer:

B

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

12）Ifa12percentfallinpriceresultsinan8percentincreaseinquantitydemanded,thepriceelasticityofdemandequals

A）0.96.

B）0.12.

C）0.67.

D）1.5.

E）0.8.

Answer:

C

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

13）ThedemandforgoodAisunitelasticif

A）a5percentfallinthepriceofAresultsinaninfiniteincreaseinthequantityofAdemanded.

B）a5percentriseinthepriceofAresultsina10percentdecreaseinthequantityofAdemanded.

C）anyincreaseinthepriceofAresultsina1percentdecreaseinthequantityofAdemanded.

D）a5percentriseinthepriceofAresultsinnochangeinthequantityofAdemanded.

E）a5percentriseinthepriceofAresultsina5percentdecreaseinthequantityofAdemanded.

Answer:

E

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

14）Demandisinelasticif

A）asmallchangeinpriceresultsinalargechangeinquantitydemanded.

B）thequantitydemandedisveryresponsivetoachangeinprice.

C）thepriceelasticityofdemandis0.2.

D）thepricedoesnotchangewhensupplyincreases.

E）a10percentchangeinpriceresultsina1percentchangeinthequantitysupplied.

Answer:

C

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

15）Ifthedemandcurveforagoodisahorizontalline,thenthegoodhas

A）zeroincomeelasticity.

B）priceelasticityofdemandequaltozero.

C）infinitepriceelasticityofdemand.

D）apriceelasticityofdemandthatislikelytoriseintheshortrun.

E）apriceelasticityofdemandthatislikelytofallintheshortrun.

Answer:

C

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

16）Ifa10percentriseinthepriceofgoodsleadstoa10percentdecreaseinquantitydemanded,thedemandcurveforthisgood

A）isvertical.

B）ishorizontal.

C）hasslopeequalto1.

D）isastraightlinewithslopeequalto10.

E）noneoftheabove.

Answer:

E

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

17）Aunitelasticdemand

A）meansthattheratioofachangeinquantitydemandedtoachangeinpriceisequalto1.

B）meansthattheratioofapercentagechangeinquantitydemandedtoapercentagechangeinpriceisequalto1.

C）meansthattheratioofachangeinpricetoachangeinquantitydemandedisequalto1.

D）isillustratedbyahorizontaldemandcurve.

E）isillustratedbyaverticaldemandcurve.

Answer:

B

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

18）Supposeariseinthepriceofagoodfrom$6.50to$7.50leadstoadecreaseinthequantitydemandedfrom10,500to9,500units.Inthisrangeofdemand,thepriceelasticityofdemandis

A）14.

B）7.

C）1,000.

D）1.

E）0.7.

Answer:

E

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

19）Afallinthepriceofagoodfrom$11.50to$8.50resultsinanincreaseinthequantitydemandedfrom19,200to20,800units.Thepriceelasticityofdemandis

A）0.27.

B）3.75.

C）0.08.

D）8.0.

E）30.

Answer:

A

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

20）Afallinthepriceofagoodfrom$10.50to$9.50resultsinanincreaseinthequantitydemandedfrom18,800to21,200units.Thepriceelasticityofdemandis

A）0.8.

B）1.25.

C）1.2.

D）8.0.

E）2.4.

Answer:

C

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

21）Supposethequantityofrootbeerdemandeddecreasesfrom105,000litresperweekto95,000litresperweekwhenthepricerisesby5percent.Thepriceelasticityofdemand

A）is2.0.

B）is0.5.

C）is10.

D）isinelastic.

E）cannotbecomputedunlessweknowtheoriginalpriceandthenewprice.

Answer:

A

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

22）SupposethatthepriceelasticityofdemandforbottledwaterinSackville,NewBrunswickis1.5,whilethepriceelasticityofdemandforbottledwaterinPrinceAlbert,Saskatchewanis0.93.ThisimpliesthatthedemandinSackvilleis________anddemandinPrinceAlbertis________.

A）unitelastic;unitelastic

B）perfectlyelastic;inelastic

C）inelastic;elastic

D）elastic;inelastic

E）elastic;unitelastic

Answer:

D

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

23）SupposethegovernmentofNovaScotiawantstoreducetheconsumptionofelectricityby5percent.Thepriceelasticityofdemandforelectricityis0.40.YouadvisetheNovaScotiagovernmentto

A）raisethepriceofelectricityby12.5percent.

B）raisethepriceofelectricityby2percent.

C）lowerthepriceofelectricityby12.5percent.

D）stayawayfromthemarketforelectricityandletthemarketmechanismfixtheproblem.

E）lowerthepriceofelectricityby2percent.

Answer:

A

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

24）SupposetheLethbridgeComputerCompanydecidestoincreasethequantityofcomputersitsellsby6percent.Ifthepriceelasticityofdemandis3.5,thecompanymust

A）raisethepriceofacomputerby1.714percent.

B）raisethepriceofacomputerby0.21percent.

C）lowerthepriceofacomputerby0.21percent.

D）lowerthepriceofacomputerby1.714percent.

E）lowerthepriceofacomputerby0.58percent.

Answer:

D

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

25）IfthedemandforsalmoninCapeBretonNovaScotiaisunitelastic,thepriceelasticityofdemandforsalmonequals

A）1.0.

B）100.0.

C）0.10.

D）zero.

E）10.0.

Answer:

A

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

26）Atapriceof$15,Jack'squantitydemandedofgoodAisthesameaswhenthepricerisesto$16.Jack'sdemandforgoodAis

A）elastic.

B）inelastic.

C）perfectlyelastic.

D）unitelastic.

E）perfectlyinelastic.

Answer:

E

Diff:

2Type:

MC

Topic:

PriceElasticityofDemand

27）Whichoneofthefollowingwillyieldameasuredpriceelasticityofdemandof5.0?

A10percentriseinpriceresultsina

A）10percentdecreasei