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1. Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units. The income elasticity of demand for good A is Select one: A. 0.4. B. 0.8. C. 2.5. D. 1.2. E. 2.0. 2. The price of a bus ride rises by 3 percent and quantity of oranges demanded decreases by 3 percent. The demand for bus rides is 3. Select one: 4.

A. unit elastic.

5.

B. perfectly inelastic.

6.

C. elastic.

7.

D. perfect elastic.

8.

E. inelastic.

3. Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent. Following the price change, consumers spend Select one: A. less of their income on bison. B. the same amount of their income on bison as before. C. more on products that are complements of bison. D. more of their income on bison. E. zero dollars on bison meat. 4. If good A is a complement of good B, then the cross elasticity of demand for good B with respect to the price of good A is Select one:

A. negative. B. positive. C. zero. D. equal to 1. E. equal to the cross elasticity of demand for good A with respect to the price of good B. 5. If a large percentage drop in the price level results in a small percentage increase in the quantity demanded, Select one: A. the price elasticity of demand is close to infinity. B. the price elasticity of demand is zero. C. demand is unit elastic. D. demand is elastic. E. demand is inelastic. 6. The demand for good A is unit elastic if Select one: A. a 5 percent rise in the price of A results in no change in the quantity of A demanded. B. any increase in the price of A results in a 1 percent decrease in the quantity of A demanded. C. a 5 percent rise in the price of A results in a 5 percent decrease in the quantity of A demanded. D. a 5 percent rise in the price of A results in a 10 percent decrease in the quantity of A demanded. E. a 5 percent fall in the price of A results in an infinite increase in the quantity of A demanded. 7. When a supply curve Select one:

A. is vertical, the good has an elasticity of supply equal to infinity. B. intersects the origin, the good has an elasticity of supply that is negative. C. intersects the origin, the good has an elasticity of supply equal to 1. D. is horizontal, the good has an elasticity of supply equal to zero. E. intersects the origin, the good has an elasticity of supply equal to zero. 8. When the price of a box of cereal is $5, the quantity demanded is 800 boxes. When the price of a box of cereal is $7, the quantity demanded is 400 boxes. Calculate the price elasticity of demand when the price of a box of cereal is $6. Select one: A. 1.0 B. 0.5 C. 200 D. 2.0 E. 0.005 9. Suppose that the price elasticity of demand for bottled water in Sackville, New Brunswick is 1.5, and the price elasticity of demand for bottled water in Prince Albert, Saskatchewan is 0.8. The demand for bottled water in Sackville is ________ and demand for bottled water in Prince Albert is ________. Select one: A. elastic; inelastic B. inelastic; elastic C. unit elastic; unit elastic D. perfectly elastic; inelastic E. elastic; unit elastic

10. A fall in the price of X from $6 to $4 increases the quantity of Y demanded from 900 to 1,100 units. What is the cross elasticity of demand for Y with respect to the price of X? Select one: A. 2 B. 0.5 C. -0.5 D. -2 E. Either 0.5 or -0.5, depending on whether X and Y are substitutes or complements. 11. When the price of gas is $1.00 a litre, the quantity demanded is 1,750 litres. When the price of gas is $2.00 a litre, the quantity demanded is 1,250 litres. Calculate the price elasticity of demand when the price is $1.50 a litre. Select one: A. 2.0 B. 5.0 C. 0.5 D. 1.5 E. 20 12. A cut in the price increases total revenue. Demand is Select one: A. elastic. B. unit elastic. C. perfectly inelastic. D. inelastic. E. equal to supply. 13. When the price elasticity of demand is ________, demand for the good is elastic.

Select one: A. positive B. greater than 1 C. equal to 1 D. between 1 and zero E. equal to zero 14. The amount of time elapsed since a price change influences the price elasticity of demand because as more time passes, Select one: A. the price of the good will return to its original value. B. consumers find more substitutes and the price elasticity of demand for the original good increases. C. the income of consumers rises and the price elasticity of demand for the good increases. D. consumers find more substitutes and the price elasticity of demand for the original good decreases. E. the income of consumers rises and the price elasticity of demand for the good decreases. 15. With higher fuel costs, airlines raise their average fare from $0.50 to $1.50 per passenger kilometre and the number of passenger kilometres decreases from 2.5 million a day to 1.5 million a day. What is the price elasticity of demand for air travel when the price is $1 per passenger kilometre? Select one: A. 0.75 B. 2 C. 50 D. 0.5 E. 1.33

16. Short-run supply is Select one: A. less elastic than momentary supply but more elastic than long-run supply. B. as elastic as either momentary or long-run supply. C. less elastic than both momentary and long-run supply. D. more elastic than both momentary and long-run supply. E. more elastic than momentary supply but less elastic than long-run supply. 17. use the figure below to answer the following question.

Figure 4.1.3

Given the relationship shown in Figure 4.1.3 between total revenue from the sale of a good and the quantity of the good sold, then Select one: A. demand for this good is perfectly elastic. B. this is an inferior good. C. this is a normal good.

D. the price elasticity of demand is 1. E. the price elasticity of demand is zero. 18. Use the table below to answer the following question. Table 4.2.1

Consider the information in Table 4.2.1. The income elasticity of demand is Select one: A. -1.33. B. 3.33. C. -2.5. D. 2.5. E. -3.33. 19. As a result of a poor growing season, the supply of apples decreases and total revenue falls. The demand for apples is Select one: A. inelastic. B. either elastic or unit elastic. C. perfectly inelastic. D. unit elastic. E. elastic. 20. The demand for a good is price inelastic if Select one:

A. a rise in price decreases total revenue. B. the good is a luxury. C. a rise in price increases total revenue. D. an increase in income increases total revenue. E. an increase in income decreases total revenue....