parkin chapter 04testbank econ1000.docx

1、parkin chapter 04 testbank econ1000Chapter 4 Elasticity4.1 Price Elasticity of Demand1) A price elasticity of demand of 2 means that a 10 percent increase in price will result in a A) 2 percent decrease in quantity demanded. B) 20 percent decrease in quantity demanded. C) 5 percent decrease in quant

2、ity demanded. D) 2 percent increase in quantity demanded. E) 20 percent increase in quantity demanded. Answer: BDiff: 2 Type: MCTopic: Price Elasticity of Demand2) The price elasticity of demand is a units-free measure of the responsiveness of the _ when all other influences on buying plans remain t

3、he same. A) quantity demanded to a change in the price of a substitute or complementB) quantity demanded to a change in incomeC) quantity demanded of a good to a change in its priceD) price to a change in quantity demanded E) none of the above Answer: CDiff: 1 Type: MCTopic: Price Elasticity of Dema

4、nd3) The concept used by economists to indicate the responsiveness of the quantity demanded of a good to a change in its price is the A) cross elasticity of demand. B) income elasticity of demand. C) substitute elasticity of demand. D) price elasticity of demand. E) elasticity of supply. Answer: DDi

5、ff: 1 Type: MCTopic: Price Elasticity of Demand4) If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded, the price elasticity of demand is A) 0.8. B) 1.25. C) 8. D) 0.125. E) 80. Answer: ADiff: 2 Type: MCTopic: Price Elasticity of Demand5) If a large percentage drop in th

6、e price level results in a small percentage increase in the quantity demanded, A) demand is inelastic. B) demand is elastic. C) demand is unit elastic. D) the price elasticity of demand is close to infinity. E) the price elasticity of demand is zero. Answer: ADiff: 2 Type: MCTopic: Price Elasticity

7、of Demand6) The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent. We conclude that the demand for apples is A) perfectly elastic.B) unit elastic.C) elastic.D) perfectly inelastic.E) inelastic.Answer: CDiff: 2 Type: MCTopic: Price Elasticity of Demand7) The pr

8、ice of oranges rises by 3 percent and quantity of oranges demanded decreases by 3 percent. We conclude that the demand for oranges is A) inelastic.B) elastic.C) perfectly inelastic.D) perfect elastic.E) unit elastic. Answer: EDiff: 2 Type: MCTopic: Price Elasticity of Demand8) The price of plums fal

9、ls by 7 percent and quantity of plums demanded increases by 6.75 percent. We conclude that the demand for plums is A) inelastic.B) perfectly elastic.C) perfectly inelastic.D) elastic.E) unit elastic.Answer: ADiff: 2 Type: MCTopic: Price Elasticity of Demand9) The price of good A falls by 10 percent

10、and quantity of good A demanded does not change. We conclude that the demand for good A is A) perfectly elastic.B) inelastic.C) perfectly inelastic.D) elastic.E) unit elastic.Answer: CDiff: 2 Type: MCTopic: Price Elasticity of Demand10) Which one of the following illustrates an inelastic demand? A)

11、A 10 percent rise in price leads to a 5 percent decrease in quantity demanded. B) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded.C) A price elasticity of demand equal to infinity.D) A price elasticity of demand equal to 1.0. E) A price elasticity of demand equal to 2.

12、0.Answer: ADiff: 2 Type: MCTopic: Price Elasticity of Demand11) Which one of the following illustrates an elastic demand? A) A 10 percent rise in price leads to a 5 percent decrease in quantity demanded. B) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded. C) A price el

13、asticity of demand equal to 0.2. D) A price elasticity of demand equal to 1.0. E) A price elasticity of demand equal to zero. Answer: BDiff: 2 Type: MCTopic: Price Elasticity of Demand12) If a 12 percent fall in price results in an 8 percent increase in quantity demanded, the price elasticity of dem

14、and equals A) 0.96. B) 0.12. C) 0.67. D) 1.5. E) 0.8. Answer: CDiff: 2 Type: MCTopic: Price Elasticity of Demand13) The demand for good A is unit elastic if A) a 5 percent fall in the price of A results in an infinite increase in the quantity of A demanded. B) a 5 percent rise in the price of A resu

15、lts in a 10 percent decrease in the quantity of A demanded. C) any increase in the price of A results in a 1 percent decrease in the quantity of A demanded. D) a 5 percent rise in the price of A results in no change in the quantity of A demanded. E) a 5 percent rise in the price of A results in a 5

16、percent decrease in the quantity of A demanded. Answer: EDiff: 2 Type: MCTopic: Price Elasticity of Demand14) Demand is inelastic if A) a small change in price results in a large change in quantity demanded. B) the quantity demanded is very responsive to a change in price. C) the price elasticity of

17、 demand is 0.2. D) the price does not change when supply increases. E) a 10 percent change in price results in a 1 percent change in the quantity supplied. Answer: CDiff: 2 Type: MCTopic: Price Elasticity of Demand15) If the demand curve for a good is a horizontal line, then the good has A) zero inc

18、ome elasticity. B) price elasticity of demand equal to zero. C) infinite price elasticity of demand. D) a price elasticity of demand that is likely to rise in the short run. E) a price elasticity of demand that is likely to fall in the short run. Answer: CDiff: 2 Type: MCTopic: Price Elasticity of D

19、emand16) If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded, the demand curve for this goodA) is vertical. B) is horizontal. C) has slope equal to 1. D) is a straight line with slope equal to 10. E) none of the above.Answer: EDiff: 2 Type: MCTopic: Price E

20、lasticity of Demand17) 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

21、 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. Answer: BDiff: 2 Type: MCTopic: Price Elasticity of Demand18) Suppose a rise in the price of a good from $6.50 to $7.50 leads to a decrease in the quantity dema

22、nded from 10,500 to 9,500 units. In this range of demand, the price elasticity of demand is A) 14. B) 7. C) 1,000. D) 1. E) 0.7. Answer: EDiff: 2 Type: MCTopic: Price Elasticity of Demand19) A fall in the price of a good from $11.50 to $8.50 results in an increase in the quantity demanded from 19,20

23、0 to 20,800 units. The price elasticity of demand is A) 0.27. B) 3.75. C) 0.08. D) 8.0. E) 30. Answer: ADiff: 2 Type: MCTopic: Price Elasticity of Demand20) A fall in the price of a good from $10.50 to $9.50 results in an increase in the quantity demanded from 18,800 to 21,200 units. The price elast

24、icity of demand is A) 0.8. B) 1.25. C) 1.2. D) 8.0. E) 2.4. Answer: CDiff: 2 Type: MCTopic: Price Elasticity of Demand21) Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent. The price elasticity of demand A) i

25、s 2.0. B) is 0.5. C) is 10. D) is inelastic. E) cannot be computed unless we know the original price and the new price. Answer: ADiff: 2 Type: MCTopic: Price Elasticity of Demand22) Suppose that the price elasticity of demand for bottled water in Sackville, New Brunswick is 1.5, while the price elas

26、ticity of demand for bottled water in Prince Albert, Saskatchewan is 0.93. This implies that the demand in Sackville is _ and demand in Prince Albert is _.A) unit elastic; unit elasticB) perfectly elastic; inelasticC) inelastic; elasticD) elastic; inelasticE) elastic; unit elastic Answer: DDiff: 2 T

27、ype: MCTopic: Price Elasticity of Demand23) Suppose the government of Nova Scotia wants to reduce the consumption of electricity by 5 percent. The price elasticity of demand for electricity is 0.40. You advise the Nova Scotia government to A) raise the price of electricity by 12.5 percent.B) raise t

28、he price of electricity by 2 percent. C) lower the price of electricity by 12.5 percent.D) stay away from the market for electricity and let the market mechanism fix the problem. E) lower the price of electricity by 2 percent.Answer: ADiff: 2 Type: MCTopic: Price Elasticity of Demand24) Suppose the

29、Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent. If the price elasticity of demand is 3.5, the company mustA) raise the price of a computer by 1.714 percent.B) raise the price of a computer by 0.21 percent.C) lower the price of a computer by 0.21 perce

30、nt.D) lower the price of a computer by 1.714 percent.E) lower the price of a computer by 0.58 percent.Answer: DDiff: 2 Type: MCTopic: Price Elasticity of Demand25) If the demand for salmon in Cape Breton Nova Scotia is unit elastic, the price elasticity of demand for salmon equalsA) 1.0.B) 100.0.C)

31、0.10.D) zero.E) 10.0.Answer: ADiff: 2 Type: MCTopic: Price Elasticity of Demand26) At a price of $15, Jacks quantity demanded of good A is the same as when the price rises to $16. Jacks demand for good A is A) elastic.B) inelastic.C) perfectly elastic.D) unit elastic.E) perfectly inelastic.Answer: EDiff: 2 Type: MCTopic: Price Elasticity of Demand27) Which one of the following will yield a measured price elasticity of demand of 5.0? A 10 percent rise in price results in a A) 10 percent decrease i