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chapter5(Elasticity)ECN2103Microeconomics

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chapter5(Elasticity)ECN2103Microeconomics
True/False
Indicatewhetherthesentenceorstatementistrueorfalse.

1.Ifthequantitydemandedofagoodissensitivetoachangeinthepriceofthat
good,demandissaidtobepriceinelastic.
ANSWER:F
POINTS: 0/1

2.Ifanincreaseinthepriceofpencilsfrom0.10to0.20reducesthequantitydemandedfrom
1000pencilsto500pencils,thenthedemandforpencilsisunitpriceelastic.
ANSWER:T
POINTS: 0/1

3.Thedemandforaspirinoveronemonthshouldbemoreelasticthanthedemandforaspirinover
oneyear.
ANSWER:F
POINTS: 0/1

4.Thepriceelasticityofdemandisdefinedasthepercentagechangeinthepriceofthatgood
dividedbythepercentagechangeinquantitydemandedofthatgood.
ANSWER:F
POINTS: 0/1

5.Ifthedemandforagoodispriceinelastic,anincreaseinitspricewillincreasetotalrevenuein
thatmarket.
ANSWER:T
POINTS: 0/1

6.Thedemandforanecessitysuchaspetroltendstobeelastic.
ANSWER:F
POINTS: 0/1

7.Ifademandcurveislinear,thepriceelasticityofdemandisconstantalongit.
ANSWER:F
POINTS: 0/1

8.Thesupplyofcarsforthisweekislikelytobemorepriceinelasticthanthesupplyofcarsforthis
year.
ANSWER:T
POINTS: 0/1

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9.Ifthepriceelasticityofsupplyforbluejeansis1.3,anincreaseinthepriceofbluejeansof10
percentwouldincreasethequantitysuppliedofbluejeansby13percent.
ANSWER:T
POINTS: 0/1

10.Thepriceelasticityofsupplytendstobemoreinelasticasthefirm'sproductionfacilityreaches
maximumcapacity.
ANSWER:T
POINTS: 0/1

11.Thepriceelasticityofdemandisdefinedas
a. thepercentagechangeinthequantitydemandeddividedbythepercentagechangein
income.
b. thepercentagechangeinincomedividedbythepercentagechangeinthequantity
demanded.
c. thepercentagechangeinthequantitydemandedofagooddividedbythepercentage
changeinthepriceofthatgood.
d. noneoftheseanswers.
e. thepercentagechangeinpriceofagooddividedbythepercentagechangeinthequantity
demandedofthatgood.
ANSWER:C
POINTS: 0/1

12.Ingeneral,aflatterdemandcurveismorelikelytobe
a. priceelastic.
b. unitpriceelastic.
c. noneoftheseanswers.
d. priceinelastic.
ANSWER:A
POINTS: 0/1

13.Ingeneral,asteepersupplycurveismorelikelytobe
a. priceelastic.
b. noneoftheseanswers.
c. unitpriceelastic.
d. priceinelastic.
ANSWER:D
POINTS: 0/1

14.Whichofthefollowingwouldcauseademandcurveforagoodtobepriceinelastic?
a. Thegoodisaluxury.
b. Thereareagreatnumberofsubstitutesforthegood.
c. Thegoodisanecessity.
d. Noneoftheseanswers.
ANSWER:C
POINTS: 0/1

15.Thedemandforwhichofthefollowingislikelytobethemostpriceinelastic?
a. transportation
b. taxirides
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c. bustickets
d. airlinetickets
ANSWER:A
POINTS: 0/1

MultipleChoice
Identifytheletterofthechoicethatbestcompletesthestatementoranswersthequestion.

16.Ifasupplycurveforagoodispriceelastic,then
a. thequantitysuppliedissensitivetochangesinthepriceofthatgood.
b. thequantitydemandedisinsensitivetochangesinthepriceofthatgood.
c. thequantitydemandedissensitivetochangesinthepriceofthatgood.
d. thequantitysuppliedisinsensitivetochangesinthepriceofthatgood.
e. noneoftheseanswers.
ANSWER:A
POINTS: 0/1

17.Ifafishermanmustsellallofhisdailycatchbeforeitspoilsforwhateverpriceheisoffered,once
thefisharecaughtthefisherman'spriceelasticityofsupplyforfreshfishis
a. zero.
b. infinite.
c. one.
d. unabletobedeterminedfromthisinformation.
ANSWER:A
POINTS: 0/1

18.Adecreaseinsupply(shifttotheleft)willincreasetotalrevenueinthatmarketif
a. demandispriceinelastic.
b. supplyispriceelastic.
c. supplyispriceinelastic.
d. demandispriceelastic.
ANSWER:A
POINTS: 0/1

19.Ifanincreaseinthepriceofagoodhasnoimpactonthetotalrevenueinthatmarket,demand
mustbe
a. alloftheseanswers.
b. priceinelastic.
c. unitpriceelastic.
d. priceelastic.
ANSWER:C
POINTS: 0/1

20.Technologicalimprovementsinagriculturethatshiftthesupplyofagriculturalcommoditiestothe
righttendto
a. increasetotalrevenuetofarmersasawholebecausethedemandforfoodiselastic.
b. increasetotalrevenuetofarmersasawholebecausethedemandforfoodisinelastic.
c. reducetotalrevenuetofarmersasawholebecausethedemandforfoodiselastic.
d. reducetotalrevenuetofarmersasawholebecausethedemandforfoodisinelastic.
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ANSWER:D
POINTS: 0/1

21.Ifsupplyispriceinelastic,thevalueofthepriceelasticityofsupplymustbe
a. infinite.
b. zero.
c. lessthan1.
d. noneoftheseanswers.
e. greaterthan1.
ANSWER:C
POINTS: 0/1

22.Ifthereisexcesscapacityinaproductionfacility,itislikelythatthefirm'ssupplycurveis
a. priceinelastic.
b. noneoftheseanswers.
c. unitpriceelastic.
d. priceelastic.
ANSWER:D
POINTS: 0/1

23.Supposethatatapriceof30permonth,thereare30,000subscriberstocabletelevisioninSmall
Town.IfSmallTownCablevisionraisesitspriceto40permonth,thenumberofsubscriberswill
fallto20,000.AtwhichofthefollowingpricesdoesSmallTownCablevisionearnthegreatest
totalrevenue?
a. 0permonth
b. 30permonth
c. 40permonth
d. Either30or40permonthbecausethepriceelasticityofdemandis1.0.
ANSWER:B
POINTS: 0/1

24.Ifdemandislinear(astraightline),thenpriceelasticityofdemandis
a. elasticintheupperportionandinelasticinthelowerportion.
b. inelasticintheupperportionandelasticinthelowerportion.
c. inelasticthroughout.
d. constantalongthedemandcurve.
e. elasticthroughout.
ANSWER:A
POINTS: 0/1

25.Ifconsumersthinkthatthereareveryfewsubstitutesforagood,then
a. supplywouldtendtobepriceelastic.
b. noneoftheseanswers.
c. demandwouldtendtobepriceinelastic.
d. demandwouldtendtobepriceelastic.
e. supplywouldtendtobepriceinelastic.
ANSWER:C
POINTS: 0/1

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