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Refer to the figure above.Which demand curve above is perfectly inelastic? A) D<sub>2</sub> B) D<sub>3</sub> C) D<sub>4</sub> D) D<sub>5</sub> Refer to the figure above.Which demand curve above is perfectly inelastic?


A) D2
B) D3
C) D4
D) D5

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Refer to the graph above and assume that the areas of the boxes are the same.Consider a situation where price decreases from P<sub>2</sub> to P<sub>1</sub>.In this price range,demand is relatively: A) inelastic because the loss in total revenue (areas D + G + I + J) is greater than the gain in total revenue (areas C + F + H) . B) elastic because the loss in total revenue (areas C + F + H) is greater than the gain in total revenue (area J) . C) elastic because the loss in total revenue (area J) is less than the gain in total revenue (areas C + F + H) . D) inelastic because the gain in total revenue (area J) is less than the loss in total revenue (areas C + F + H) . Refer to the graph above and assume that the areas of the boxes are the same.Consider a situation where price decreases from P2 to P1.In this price range,demand is relatively:


A) inelastic because the loss in total revenue (areas D + G + I + J) is greater than the gain in total revenue (areas C + F + H) .
B) elastic because the loss in total revenue (areas C + F + H) is greater than the gain in total revenue (area J) .
C) elastic because the loss in total revenue (area J) is less than the gain in total revenue (areas C + F + H) .
D) inelastic because the gain in total revenue (area J) is less than the loss in total revenue (areas C + F + H) .

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Sony is considering a 10 percent price reduction on its LCD television sets.If the demand for sets in this price range is inelastic:


A) revenues from LCD sets will remain constant.
B) revenues from LCD sets will decrease.
C) revenues from LCD sets will increase.
D) the number of LCD sets sold will decrease.

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Inelastic demand displays:


A) little price stretch.
B) little quantity stretch.
C) considerable price stretch.
D) considerable quantity stretch.

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Refer to the graph above.Which statement is correct? A) The demand curve is perfectly elastic. B) The demand curve is perfectly inelastic. C) The supply curve is perfectly elastic. D) The supply curve is perfectly inelastic. Refer to the graph above.Which statement is correct?


A) The demand curve is perfectly elastic.
B) The demand curve is perfectly inelastic.
C) The supply curve is perfectly elastic.
D) The supply curve is perfectly inelastic.

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Refer to the table above.Which product is an inferior good? A) Product W B) Product X C) Product Y D) Product Z Refer to the table above.Which product is an inferior good?


A) Product W
B) Product X
C) Product Y
D) Product Z

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State government wants to increase the taxes on cigarettes to increase tax revenue.This tax would only be effective in raising new tax revenues if the price elasticity of demand is:


A) unity.
B) elastic.
C) inelastic.
D) perfectly elastic.

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Refer to the above data.Over which price range is the price elasticity of demand inelastic? A) $20-$18 B) $18-$16 C) $12-$10 D) $10-$8 Refer to the above data.Over which price range is the price elasticity of demand inelastic?


A) $20-$18
B) $18-$16
C) $12-$10
D) $10-$8

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Refer to the above data.Over which price range is the price elasticity of demand unitary? A) $16-$14 B) $14-$12 C) $12-$10 D) $10-$8 Over the price range $12-$10,the change in quantity is (36 - 30) /(36 + 30) = 0.091 and the change in price is (12 - 10) /(12 + 10) = 0.091.Thus,price elasticity is 0.091/0.091 = 1.0. Refer to the above data.Over which price range is the price elasticity of demand unitary?


A) $16-$14
B) $14-$12
C) $12-$10
D) $10-$8
Over the price range $12-$10,the change in quantity is (36 - 30) /(36 + 30) = 0.091 and the change in price is (12 - 10) /(12 + 10) = 0.091.Thus,price elasticity is 0.091/0.091 = 1.0.

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Airlines charge business travelers more than leisure travelers because there is a more:


A) elastic supply of business travel.
B) inelastic supply of business travel.
C) elastic demand for business travel.
D) inelastic demand for business travel.

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Demand can be said to be inelastic when:


A) an increase in price results in a reduction in total revenue.
B) a reduction in price results in an increase in total revenue.
C) a reduction in price results in a decrease in total revenue.
D) the elasticity coefficient exceeds one.

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The supply curve for cars will be more elastic the:


A) greater the quantity demanded.
B) longer the time interval considered.
C) greater the decline in input prices.
D) less able producers are to make other goods.

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If an increase in the supply of a product results in a decrease in the price,but no change in the actual quantity of the product exchanged,then the:


A) price elasticity of supply is zero.
B) price elasticity of supply is infinite.
C) price elasticity of demand is unitary.
D) price elasticity of demand is zero.

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The demand for cocaine is believed to be relatively elastic among addicts.

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If a business decreased the price of its product from $10 to $9 when demand was price inelastic,then total revenues would:


A) decrease.
B) increase.
C) remain unchanged.
D) be perfectly inelastic.

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At a price of $4 per unit,Gadgets Inc.is willing to supply 20,000 gadgets,while United Gadgets is willing to supply 10,000 gadgets.If the price were to rise to $8 per unit,their respective quantities supplied would rise to 45,000 and 25,000.If these are the only two firms supplying gadgets,what is the elasticity of supply in the market for gadgets?


A) 1.2
B) 1.0
C) 0.833
D) 0.80
The change in quantity supplied is (70,000 - 30,000) /(70,000 + 30,000) = 0.40 and the change in price is (8 - 4) /(8 + 4) = 0.333.Thus,elasticity is 0.40/.0333 = 1.2.

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In the price range where demand is elastic,an increase in price will result in a gain in total revenue.

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Changes in demand have a large effect on the price of gold because the:


A) supply of gold is relatively elastic.
B) supply of gold is relatively inelastic.
C) demand for gold is relatively elastic.
D) demand for gold is relatively inelastic.

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Suppose that when the price of good X changes from $5 to $10,the demand for good Y changes from 110 to 100,then the cross-elasticity of demand is:


A) -0.09 and the goods are complements.
B) 1.44 and the goods are complements.
C) 1.44 and the goods are substitutes.
D) -0.143 and the goods are complements.
The percent change in quantity of Y is (100 - 110) /(100 + 110) = -0.0476 and the percent change in the price of X is (10 - 5) /(10 + 5) = 0.333.Thus the cross-price-elasticity is-0.0476/0.333 = -0.143.

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Refer to the table above.Starting at a $1 price,at what price range does demand become elastic? A) $1-2 B) $2-3 C) $3-4 D) $4-5 At $3-4,the change in quantity is (20 - 30) /(20 + 30) = 0.20 and the change in price is (3 - 4) /(3 + 4) = 0.143.Thus,elasticity is 1.40,which is elastic. Refer to the table above.Starting at a $1 price,at what price range does demand become elastic?


A) $1-2
B) $2-3
C) $3-4
D) $4-5
At $3-4,the change in quantity is (20 - 30) /(20 + 30) = 0.20 and the change in price is (3 - 4) /(3 + 4) = 0.143.Thus,elasticity is 1.40,which is elastic.

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