CHAPTER 4 - ELASTICITY of DEMAND and SUPPLY

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15 questions

MASLIZA BINTI MAZLAN

•over 4 years ago

Question 1

Multiple Choice

10 points

The price elasticity of demand for the vertical demand curve is

A.unitary elastic

B.perfectly elastic

C.inelastic

D.perfectly inelastic

Question 2

Multiple Choice

5 points

Price elasticity of supply for goods is the ratio between

A.change in quantity supply and changes in price

B.change in price and changes in supply quantity

C.change in percentage of supply quantity with changes in the percentage of goods price

D.change in price and changes in percentage in supply quantity

Question 3

Multiple Choice

5 points

Based on a survey, the income elasticity of demand for the iPad Mini is 1.4. This shows that the iPad Mini

A.is a luxury goods

B.is a normal goods

C.is a necessity goods

D.is a substitutes goods

Question 4

True/False

5 points

A mother who buys her son two sets of school uniforms every year regardless of changes in their prices has a perfectly inelastic demand for school uniforms

A.True

B.False

Question 5

Multiple Choice

5 points

If a consumer's income increases by 10% caused demand for pizza to increase by 12%, then pizza can be considered as

A.necessity goods

B.normal goods

C.giffen goods

D.luxury goods

Question 6

Multiple Choice

5 points

If the price elasticity of demand for a good is zero, this means that the goods

A.will still be in demand when there is an increase in price

B.will not be in demand when there is an increase in price

C.will be purchased in the same quantity at any price level

D.will be purchased in smaller quantities when there is an increase in price

Question 7

True/False

5 points

It is reasonable to expect the cross-price elasticity of demand for golf clubs and golf balls to be positive.

A.True

B.False

Question 8

Short Answer

5 points

The price of goods A increases from RM200 to RM300, the quantity supplied increases from 100 units to 180 units. Compute the price elasticity of supply for goods A

Question 9

Short Answer

5 points

Calculate the income elasticity of demand for Goods S when income increases from RM1,600 to RM2,400.

Question 10

True/False

5 points

If a 3 percent decrease in the price of BMW cars results in a 5 percent increase in the number of BMW cars sold, the demand for BMW cars is unit elastic

A.True

B.False

Question 11

Short Answer

5 points

If the price for Pepsi decreases from RM60 to RM40, calculate the cross elasticity of demand for Pepsi and Coca Cola

Question 12

Short Answer

5 points

If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will

Question 13

Multiple Choice

5 points

The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that:

A.Cheerios are a luxury

B.cereals are a necessity

C.there are more substitutes for Cheerios than for cereals as a whole

D.consumption of cereals as a whole is greater than consumption of Cheerios

Question 14

Multiple Choice

5 points

The price elasticity of demand for a textbook is estimated to be 1 no matter what the price or quantity demanded. In this case,

A.a 10 percent increase in price will result in a 10 percent increase in the quantity demanded

B.a 10 percent increase in price will result in a 10 percent decrease in the quantity demanded

C.an increase in price will decrease the total revenue of sellers

D.a decrease in price will increase the total revenue of sellers

Question 15

Open-ended

5 points

Do you understand the whole topic 4?