Economics Quiz 6

A demand curve that is parallel to the horizontal axis is: a. perfectly inelastic. b. perfectly elastic. c. relatively inelastic. d. relatively elastic.

The greater the ease of shifting resources from product X to product Y in the production process, the greater is the elasticity of supply of product Y. True False

A leftward shift in the supply curve of product X will increase equilibrium price to a greater extent the: a. more elastic the supply curve. b. larger the elasticity of demand coefficient. c. more elastic the demand for the product. d. more inelastic the demand for the product.

The supply of product X is perfectly inelastic if the price of X rises by: a. 5 percent and quantity supplied rises by 7 percent. b. 8 percent and quantity supplied rises by 8 percent. c. 10 percent and quantity supplied stays the same. d. 7 percent and quantity supplied rises by 5 percent.

If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will: a. decrease the amount demanded by more than 10 percent. b. increase the amount demanded by more than 10 percent. c. decrease the amount demanded by less than 10 percent. d. increase the amount demanded by less than 10 percent.

Suppose the price of a product rises and the total revenue of sellers increases. a. It can be concluded that the demand for the product is elastic. b. It can be concluded that the supply of the product is elastic. c. It can be concluded that the supply of the product is inelastic. d. No conclusion can be reached with respect to the elasticity of supply.

Suppose that a 20 percent increase in the price of normal good Y causes a 10 percent decline in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is: a. negative and therefore these goods are substitutes. b. negative and therefore these goods are complements. c. positive and therefore these goods are substitutes. d. positive and therefore these goods are complements.

Compared to coffee, we would expect the cross elasticity of demand for: a. tea to be negative, but positive for cream. b. tea to be positive, but negative for cream. c. both tea and cream to be negative. d. both tea and cream to be positive.

A linear demand curve has a constant elasticity over the full range of the curve. True False

Studies of the minimum wage suggest that the price elasticity of demand for teenage workers is relatively inelastic. This means that: a. an increase in the minimum wage would increase the total incomes of teenage workers as a group. b. an increase in the minimum wage would decrease the total incomes of teenage workers as a group. c. the unemployment effect of an increase in the minimum wage would be relatively large. d. the cross elasticity of demand between teenage and adult workers is positive and very large.

The supply of known Monet paintings is: a. perfectly elastic. b. perfectly inelastic. c. relatively elastic. d. relatively inelastic.

The formula for cross elasticity of demand is percentage change in: a. quantity demanded of X/percentage change in price of X. b. quantity demanded of X/percentage change in income. c. quantity demanded of X/percentage change in price of Y. d. price of X/percentage change in quantity demanded of Y.

The larger the coefficient of price elasticity of demand for a product, the: a. larger the resulting price change for an increase in supply. b. more rapid the rate at which the marginal utility of that product diminishes. c. less competitive will be the industry supplying that product. d. smaller the resulting price change for an increase in supply.

A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes. True False