1. The price elasticity of demand coefficient indicates: |
A |

2. The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from |
D |

3. Suppose the price elasticity coefficients of demand are 1.43, 0.67, 1.11 and 0.29 for products W, X, Y and |
A |

4. If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will: |
C |

5. Suppose that, as the price of Y falls from $2.00 to $1.90, the demanded quantity of Y increases from 110 to |
C |

6. A perfectly inelastic demand schedule: |
B |

7. If the supply of product X is perfectly elastic, an increase in the demand for it will increase: |
B |

8. A given leftward shift in the supply curve of product X will increase equilibrium price to a greater extent the: |
D |

9. In which of the following instances will total revenue decline? |
D |

10. In which of the following cases will total revenue increase? |
C |

11. Price elasticity of demand is generally: |
A |

12. The main determinant of elasticity of supply is the: |
B |

13. Suppose the supply of product X is perfectly inelastic. If there is an increase in the demand for this product, equilibrium price: |
D |

14. Suppose that the price of product X rises by 20%, and the quantity supplied of X increases by 18%. The |
C |

15. Supply curves tend to be: |
B |

16. The supply of Monet’s paintings is: |
B |

17. Suppose the income elasticity of demand for toys is +2.00.This means that: |
A |

18. If the income elasticity of demand for lard is -3.00, this means that: |
C |

19. The larger the positive cross elasticity coefficient of demand between products X and Y, the: |
B |

20. The formula for cross price elasticity of demand is: |
C |

21. Cross elasticity of demand measures how sensitive purchases of a given product are to changes in: |
A |

22. Suppose that a 20% increase in the price of normal good Y causes a 10% decline in the quantity demanded |
B |

23. Assume that a 4% increase in income in the economy produces a 5% increase in the quantity demanded of |
D |

24. Other things being the same, the shortage associated with a price ceiling will be greater, the: |
B |

25. ‘Black markets’ are associated with: |
C |

26. Assume the demand for a product is perfectly inelastic. If government establishes a price floor which is $2 above the equilibrium price, the resulting: |
C |

27. If an effective legal ceiling is imposed upon credit card interest rates, we would expect: |
D |

28. Assume a supply which is perfectly inelastic. If a sales tax is introduced: |
D |

29. If a legal ceiling price is set above the equilibrium price: |
D |

30. An effective price floor on wheat will: |
C |

31. A price floor in a competitive market will result in persistent shortages of a product. |
… |

32. A ceiling price in a competitive market will result in persistent surpluses of a product. |
… |

33. The smaller the number of good substitutes for a product, the greater will be the price elasticity of demand |
… |

34. If price and total revenue are directly related, it can be concluded that demand is inelastic. |
… |

35. If price changes and total revenue changes in the opposite direction, we can conclude that demand is |
… |

36. Quantity demanded per month Price Quantity supplied per month |
… |

37. Quantity demanded per month Price Quantity supplied per month |
… |

38. Cross elasticity of demand measures the effect of a change in the price of one product upon the quantity |
… |

39. Income elasticity measures the effect of a change in income upon the purchases of some good or service. |
… |

40. If the coefficient of income elasticity of demand is positive, the product is an inferior good. |
… |

41. Price elasticity over any range of a demand curve is measured by the slope of the demand curve over that range. |
… |

42. The price elasticity of demand measures how responsive: |
C |

43. Demand for a good would tend to be more inelastic the: |
A |

44. There are very few, if any, good substitutes for motor oil. Therefore: |
C |

45. Economists compute the price elasticity of demand as the: |
C |

46. Suppose there is a 6 per cent increase in the price of good X and a resulting 6per cent decrease in the quantity of X demanded. Price elasticity of demand for X is: |
A |

47. The main reason for using the midpoints formula to calculate elasticity is that it: |
A |

48. Demand is unit elastic if elasticity is: |
C |

49. You produce jewellery boxes. If the demand for jewellery boxes is elastic and you want to increase your total revenue, you should: |
B |

50. If the cross-price elasticity of demand is 1.25, then the two goods would be: |
D |

51. If the elasticity of supply is zero, then: |
C |

52. If the elasticity of supply of a product is 2.5, we know that supply is: |
B |

53. Rent control is: |
B |

54. When government imposes price ceilings and floors in a market: |
A |

55. Assume that the demand and supply curves for cars are elastic. If the government imposed a $500 sales tax on each car, we can assume that the: |
A |

56. A tax placed on the seller of a good: |
A |

57. A tax on the sellers of TVs: |
D |

58. A $2.00 tax placed on the sellers of mailboxes will shift the supply curve: |
A |

59. If a sales tax is imposed on a market with inelastic demand and elastic supply: |
C |

# econ 910 chapter 6

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