Elasticities of Demand and supply MCQs

The slope of a demand curve depends on

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

The price elasticity of demand depends on

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

The price elasticity of demand measures

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

When the quantity of coal supplied is measured in kilograms instead of pounds, the demand for coal becomes

more elastic.
neither more nor less elastic.
less elastic.
undefined

The price elasticity of demand equals

the percentage change in the quantity demanded divided by the percentage change in the price.
the change in the quantity demanded divided by the change in price.
the percentage change in the price divided by the percentage change in the quantity demanded.
the change in the price divided by the change in quantity demanded.

If a rightward shift of the supply curve leads to a 6 percent decrease in the price and a 5 percent increase in the quantity demanded, the price elas...

0.83.
0.30.
0.60.
1.20.

A 10 percent increase in the quantity of spinach demanded results from a 20 percent decline in its price. The price elasticity of demand for spinach ...

0.5.
20.0.
2.0.
10.0.

A 20 percent increase in the quantity of pizza demanded results from a 10 percent decline in its price. The price elasticity of demand for pizza is

2.0.
10.0.
0.5.
20.0.

Suppose a rise in the price of peaches from $5.50 to $6.50 per bushel decreases the quantity demanded from 12,500 to 11,500 bushels. The price elasti...

0.5.
1000.0.
2.0.
1.0.

A fall in the price of lemons from $10.50 to $9.50 per bushel increases the quantity demanded from 19,200 to 20,800 bushels. The price elasticity of ...

1.25.
1.20.
8.00.
0.80.

A fall in the price of cabbage from $10.50 to $9.50 per bushel increases the quantity demanded from 18,800 to 21,200 bushels. The price elasticity of...

1.20.
0.80.
8.00.
1.25.

Suppose that the quantity of root beer demanded declines from 103,000 gallons per week to 97,000 gallons per week as a consequence of a 10 percent in...

1.66.
6.00.
0.60.
1.40.

The price elasticity of demand is 5.0 if a 10 percent increase in the price results in a ________ decrease in the quantity demanded.

10 percent
50 percent
2 percent
5 percent

A shift of the supply curve of oil raises the price of oil from $9.50 a barrel to $10.50 a barrel and reduces the quantity demanded from 41 million t...

2 million barrels a day per dollar.
0.5.
$1 per 2 million barrels a day.
2.0.

If demand is price elastic,

a 1 percent decrease in the price leads to an increase in the quantity demanded that exceeds 1 percent.
a 1 percent increase in the price leads to an increase in the quantity demanded that exceeds 1 percent.
the price is very sensitive to any shift of the supply curve.
a 1 percent decrease in the price leads to a decrease in the quantity demanded that is less than 1 percent.

The price elasticity of demand can range between

negative one and one.
zero and infinity.
zero and one.
negative infinity and infinity.

Demand is perfectly inelastic when

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

If the price elasticity is between 0 and 1, demand is

inelastic
elastic
perfectly elastic.
unit elastic.

Demand is inelastic if

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

A good with a vertical demand curve has a demand with

infinite elasticity.
unit elasticity.
zero elasticity.
varying elasticity.

When the price elasticity of demand for a good equals

0, the demand curve is horizontal.
1, the demand curve is vertical.
1, the demand curve is horizontal.
0, the demand curve is vertical.

A straight-line demand curve along which the price elasticity of demand equals 0 is one that

forms a 45 degree angle with the vertical axis.
is horizontal.
is vertical.
forms a 60 degree angle with the horizontal axis.

The demand for movies is unit elastic if

any increase in the price leads to a 1 percent decrease in the quantity demanded.
a 5 percent decrease in the price leads to an infinite increase in the quantity demanded.
a 5 percent increase in the price leads to a 5 percent decrease in the quantity demanded.
a 5 percent increase in the price leads to a 5 percent increase in total revenue.

Unit elastic demand

means that the ratio of a change in the quantity demanded to a change in the price equals 1.
will be vertical.
means that the ratio of a percentage change in the quantity demanded to a percentage change in the price equals 1.
will be horizontal.

A good with a horizontal demand curve has a demand

with an income elasticity of demand of 0.
with a price elasticity of demand of infinity.
for which there are no substitute.
with a price elasticity of demand of 0.

On a linear demand curve that intersects both axes,

the elasticity decreases as the price falls and quantity increases.
the elasticity is less than 1.00 at all prices.
the elasticity equals 1.00 at all prices.
the elasticity exceeds 1.00 at all prices.

On a straight-line downward-sloping demand curve, the maximum elasticity of demand occurs

where it intersects the supply curve.
at its vertical intercept.
at its horizontal intercept.
at its midpoint.

A straight-line demand curve with negative slope intersects the horizontal axis at 100 tons per week. At the midpoint on the demand curve (correspondi...

greater than 1.0.
0.5.
1.0.
0.

A straight-line demand curve with negative slope intersects the horizontal axis at 200 tons per week. The point on the demand curve at which the price...

that would be negative if a negative quantity demanded were possible.
of 100 tons.
of 0 tons.
of 200 tons.

Demand is inelastic if

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

Demand is unit elastic when

a shift of the supply curve leads to no change in price.
the slope of the demand curve is -1.
a change in the price of the product leads to no change in the total revenue.
a shift of the supply curve leads to an equal shift of the demand curve.

Producers' total revenue will decrease if

the price rises and demand is inelastic.
income increases and the good is a normal good.
the price rises and demand is elastic.
income falls and the good is an inferior good.

Producers' total revenue will increase if

income falls and the good is a normal good.
the price rises and demand is inelastic.
the price rises and demand is elastic.
income increases and the good is an inferior good.

If the demand for a good is unit elastic,

a 5 percent increase in price results in a 5 percent increase in total revenue.
the demand curve is a straight line with slope of -1.
a 5 percent increase in price results in a 5 percent decrease in total revenue.
a 5 percent increase in price does not change total revenue.

A shift of the supply curve of oil raises the price from $10 a barrel to $30 a barrel and reduces the quantity demanded from 40 million to 23 million ...

supply of oil is elastic.
supply of oil is inelastic.
demand for oil is inelastic.
demand for oil is elastic.

A shift of the supply curve of oil raises the price from $10 a barrel to $15 a barrel and reduces the quantity demanded from 40 million to 15 million...

demand for oil is elastic.
supply of oil is elastic.
supply of oil is inelastic.
demand for oil is inelastic.

A leftward shift of the supply curve of cookies raises the price of a cookie from 10 cents to 20 cents and decreases the quantity demanded from 700,00...

the supply of cookies is elastic.
the supply of cookies is inelastic.
the demand for cookies is elastic.
the demand for cookies is inelastic.

The demand for a good is elastic if

a decrease in its price results in a decrease in total revenue.
the good is a necessity.
an increase in its price results in an increase in total revenue.
an increase in its price results in a decrease in total revenue.

If a price decrease results in your expenditure on a good decreasing, your demand must be

unit
inelastic
linear
elastic

An increase in subway fares in New York City will boost your expenditures on subway rides if

the supply of subway rides is elastic.
the supply of subway rides is inelastic.
your demand for subway rides is inelastic.
your demand for subway rides is elastic.

The more substitutes available for a product,

the larger is its income elasticity of demand.
the smaller is its income elasticity of demand.
the smaller is its price elasticity of demand.
the larger is its the price elasticity of demand.

Of the following, demand is likely to be the least elastic for

Toyota automobiles.
compact disc players.
Ford automobiles.
toothpicks

Of the following, demand is likely to be the least elastic for

pink grapefruit.
iceberg lettuce.
insulin for diabetics.
diamonds

The demand for food is most elastic in countries

with low income levels.
that are highly urbanized.
with intermediate income levels.
with high income levels.

The demand for Honda Accords is

probably inelastic and less elastic than the demand for automobiles.
probably elastic but less elastic than the demand for automobiles.
probably elastic and more elastic than the demand for automobiles.
probably inelastic but more elastic than the demand for automobiles.

The route from Dallas to Mexico City is served by more than one airline. The demand for tickets from American Airlines for that route is probably

elastic and more elastic than the demand for all tickets for that route.
inelastic and less elastic than the demand for all tickets for that route.
elastic but less elastic than the demand for all tickets for that route.
inelastic but more elastic than the demand for all tickets for that route.

The elasticity of demand for Gateway computers is probably

elastic and smaller than the elasticity of demand for computers overall.
inelastic and smaller than the elasticity of demand for computers overall.
inelastic but larger than the elasticity of demand for computers overall.
elastic and larger than the elasticity of demand for computers overall.

Aglets are the metal or plastic tips on shoelaces that make it easier to lace your shoes. The demand for aglets is probably

perfectly elastic.
inelastic
elastic but not perfectly elastic.
unit elastic.

The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of

its complements but not its substitutes.
its substitutes but not its complements.
its substitutes and its complements.
neither its substitutes nor its complements.

If goods are complements, definitely their

income elasticities are negative.
income elasticities are positive.
cross elasticities are positive.
cross elasticities are negative.

If a rise in the price of good 1 decreases the quantity of good 2 demanded,

the cross elasticity of demand is negative.
good 1 is an inferior good.
good 2 is an inferior good.
the cross elasticity of demand is positive.

The cross elasticity of demand between apples and oranges is defined as

the price elasticity of demand for apples divided by the price elasticity of demand for oranges.
the change in the quantity of apples demanded divided by the change in the quantity of oranges demanded.
the percentage change in the quantity of apples demanded divided by the percentage change in the price of oranges.
the percentage change in the quantity of apples demanded divided by the percentage change in the quantity of oranges demanded.

If the cross elasticity of demand between goods A and B is positive,

the demands for A and B are both price elastic.
A and B are complements.
A and B are substitutes.
the demands for A and B are both price inelastic.

If the cross elasticity of demand between goods A and B is negative,

the demands for A and B are both price elastic.
A and B are complements.
the demands for A and B are both price inelastic.
A and B are substitutes.

The greater the substitutability between Northwest timber and Southeast timber, the ________ is the cross elasticity of demand between timber from the...

smaller; smaller
larger; smaller
smaller; larger
larger; larger

If goods A and B are complements,

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

If a rise in the price of good B increases the quantity demanded of good A,

B is a substitute for A, but A is a complement to B.
A is a substitute for B, but B is a complement to A.
A and B are complements.
A and B are substitutes.

If a fall in the price of good A increases the quantity demanded of good B,

A and B are substitutes
A and B are complements.
B is a substitute for A, but A is a complement to B.
A is a substitute for B, but B is a complement to A.

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is

positive, that is, Coke and Pepsi are complements.
negative, that is, Coke and Pepsi are complements.
positive, that is, Coke and Pepsi are substitutes.
negative, that is, Coke and Pepsi are substitutes.

A rise in the price of good A will shift the

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

The income elasticity of demand is the percentage change in

income divided by the percentage change in price.
the quantity demanded divided by the percentage change in income.
the price divided by the percentage change in income.
income divided by the percentage change in quantity demanded.

Demand is income elastic if

an increase in income will not affect the quantity demanded.
a small percentage increase in income will result in a large percentage increase in quantity demanded.
the good in question has close substitutes.
a large percentage increase in income will result in a small percentage increase in quantity demanded.

The income elasticity of demand is high for

shelter
luxuries
clothing
food

To say that turnips are inferior goods means that the income elasticity

is definitely greater than 1.
is negative.
is positive but could be greater than or less then (or equal to) 1.
is definitely between 0 and 1.

An increase in Abigail's income decreases her demand for cassette tapes. For her, cassette tapes are

a complement to any good.
a normal good.
an inferior good.
a substitute good.

Goods whose income elasticities are negative are called

superior goods.
inferior goods.
normal goods.
complements

A 10 percent increase in income has caused a 5 percent decrease in the quantity demanded. The income elasticity is

0.5.
-2.0.
2.0.
-0.5.

Deb's income has just risen from $950 per week to $1,050 per week. As a result, she decides to increase the number of movies she attends each mon...

income inelastic.
income elastic.
represented by a vertical line.
represented by a horizontal line.

Fred's income has just risen from $940 per week to $1,060 per week. As a result, he decides to purchase 9 percent more steak per week. The income...

0.75.
1.33.
0.90.
1.00.

Joan's income has just risen from $940 per week to $1,060 per week. As a result, she decides to purchase 12 percent more lettuce per week. The i...

1.33.
0.90.
1.00.
0.75.

A 10 percent increase in income causes the quantity of orange juice demanded to increase from 19,200 to 20,800 gallons. The income elasticity of deman...

0.8.
1.2.
1.0.
0.5.

A 10 percent increase in income causes the quantity of apple juice demanded to increase from 18,800 to 21,200 gallons. The income elasticity of demand...

0.5.
1.0.
1.2.
0.8.

Of the following, which one is most likely to have a negative income elasticity of demand?

shoes
tennis balls
inter-city bus travel
frozen yogurt

The increase in the demand for widgets, shown in the figure above, is caused by an increase in average incomes from $28,500 per year to $31,500 per ye...

4.
3/4.
1/4.
4/3.

As income rises, the share of income spent on food in the United States

rises
remains constant at 15 percent.
falls
remains constant at 33 percent.

The elasticity of supply measures the responsiveness of

quantity supplied to changes in price.
quantity demanded to changes in supply.
quantity supplied to changes in income.
quantity supplied to changes in demand.

The elasticity of supply measures the sensitivity of

supply to changes in costs.
quantity supplied to a change in price.
price to changes in supply.
quantity supplied to quantity demanded.

On most days the price of a rose is $1 and 80 roses are purchased. On Valentine's Day the demand increases so that the price of a rose rises to $...

demand for roses is about 1.8.
supply of roses is about 1.8.
demand for roses is about 0.55.
supply of roses is about 0.55.

Supply is elastic if

a 1 percent change in price causes a larger percentage change in quantity supplied.
the good in question is a normal good.
the slope of the supply curve is positive.
a 1 percent change in price causes a smaller percentage change in quantity supplied.