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Final

Economics 1021A/B Study Guide - Final Guide: Cape Breton Nova, Toronto Star, Root Beer


Department
Economics
Course Code
ECON 1021A/B
Professor
Jeannie Gillmore
Study Guide
Final

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Parkin/Bade, Economics: Canada in the Global Environment, 8e
Chapter 4 Elasticity
4.1 Price Elasticity of Demand
1) A price elasticity of demand of 2 means that a 10 percent increase in price will result in a
A) 2 percent decrease in quantity demanded.
B) 20 percent decrease in quantity demanded.
C) 5 percent decrease in quantity demanded.
D) 2 percent increase in quantity demanded.
E) 20 percent increase in quantity demanded.
Answer: B
Diff: 2 Type: MC
Topic: Price Elasticity of Demand
2) The price elasticity of demand is a units-free measure of the responsiveness of the ________
when all other influences on buying plans remain the same.
A) quantity demanded to a change in the price of a substitute or complement
B) quantity demanded to a change in income
C) quantity demanded of a good to a change in its price
D) price to a change in quantity demanded
E) none of the above
Answer: C
Diff: 1 Type: MC
Topic: Price Elasticity of Demand
3) The concept used by economists to indicate the responsiveness of the quantity demanded of a
good to a change in its price is the
A) cross elasticity of demand.
B) income elasticity of demand.
C) substitute elasticity of demand.
D) price elasticity of demand.
E) elasticity of supply.
Answer: D
Diff: 1 Type: MC
Topic: Price Elasticity of Demand
4) If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded, the price
elasticity of demand is
A) 0.8.
B) 1.25.
C) 8.
D) 0.125.
E) 80.
Answer: A
Diff: 2 Type: MC
Topic: Price Elasticity of Demand
Copyright © 2013 Pearson Canada Inc. 181
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Parkin/Bade, Economics: Canada in the Global Environment, 8e
5) If a large percentage drop in the price level results in a small percentage increase in the
quantity demanded,
A) demand is inelastic.
B) demand is elastic.
C) demand is unit elastic.
D) the price elasticity of demand is close to infinity.
E) the price elasticity of demand is zero.
Answer: A
Diff: 2 Type: MC
Topic: Price Elasticity of Demand
6) The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent.
We conclude that the demand for apples is
A) perfectly elastic.
B) unit elastic.
C) elastic.
D) perfectly inelastic.
E) inelastic.
Answer: C
Diff: 2 Type: MC
Topic: Price Elasticity of Demand
7) The price of oranges rises by 3 percent and quantity of oranges demanded decreases by 3
percent. We conclude that the demand for oranges is
A) inelastic.
B) elastic.
C) perfectly inelastic.
D) perfect elastic.
E) unit elastic.
Answer: E
Diff: 2 Type: MC
Topic: Price Elasticity of Demand
8) The price of plums falls by 7 percent and quantity of plums demanded increases by 6.75
percent. We conclude that the demand for plums is
A) inelastic.
B) perfectly elastic.
C) perfectly inelastic.
D) elastic.
E) unit elastic.
Answer: A
Diff: 2 Type: MC
Topic: Price Elasticity of Demand
Copyright © 2013 Pearson Canada Inc. 182
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Parkin/Bade, Economics: Canada in the Global Environment, 8e
9) The price of good A falls by 10 percent and quantity of good A demanded does not change.
We conclude that the demand for good A is
A) perfectly elastic.
B) inelastic.
C) perfectly inelastic.
D) elastic.
E) unit elastic.
Answer: C
Diff: 2 Type: MC
Topic: Price Elasticity of Demand
10) Which one of the following illustrates an inelastic demand?
A) A 10 percent rise in price leads to a 5 percent decrease in quantity demanded.
B) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded.
C) A price elasticity of demand equal to infinity.
D) A price elasticity of demand equal to 1.0.
E) A price elasticity of demand equal to 2.0.
Answer: A
Diff: 2 Type: MC
Topic: Price Elasticity of Demand
11) Which one of the following illustrates an elastic demand?
A) A 10 percent rise in price leads to a 5 percent decrease in quantity demanded.
B) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded.
C) A price elasticity of demand equal to 0.2.
D) A price elasticity of demand equal to 1.0.
E) A price elasticity of demand equal to zero.
Answer: B
Diff: 2 Type: MC
Topic: Price Elasticity of Demand
12) If a 12 percent fall in price results in an 8 percent increase in quantity demanded, the price
elasticity of demand equals
A) 0.96.
B) 0.12.
C) 0.67.
D) 1.5.
E) 0.8.
Answer: C
Diff: 2 Type: MC
Topic: Price Elasticity of Demand
Copyright © 2013 Pearson Canada Inc. 183
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