Question

31) If the percentage change in the price of a good exceeds the percentage change in the quantity supplied, then the supply

is

A) elastic.

B) inelastic. C) unit elastic.

D) perfectly elastic. E) perfectly inelastic.

33) When the percentage change in the quantity supplied equals the percentage change in price, the supply is

A) elastic.

B) inelastic.

C) unit elastic.

D) perfectly elastic. E) perfectly inelastic.

34) When the percentage change in the quantity supplied is less than the percentage change in price, the supply is

A) elastic.

B) inelastic.

C) unit elastic.

D) perfectly unit elastic. E) perfectly elastic.

36) What is the formula for the cross elasticity of demand? The percentage change in the

A) quantity demanded divided by the percentage change in the price of a substitute or complement. B) quantity supplied divided by the percentage change in price.

C) quantity demanded divided by the percentage change in price.

D) quantity demanded divided by the percentage change in income.

E) equilibrium quantity demanded divided by the equilibrium quantity supplied.

37) If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent, then X and Y are

A) complements and the cross elasticity of demand equals 2.

B) substitutes and the cross elasticity of demand equals 1/2.

C) substitutes and the cross elasticity of demand equals 2.

D) complements and the income elasticity of demand equals 2.

E) normal goods and the income elasticity of demand of each equals 2.

Answer 1

31) If the percentage change in the price of a good exceeds the percentage change in the quantity supplied, then the supply is

B) inelastic

33) When the percentage change in the quantity supplied equals the percentage change in price, the supply is

C) unit elastic.

In this case, when a percentage change in quantity=change in price the elasticity is equal to 1 or unitary.

34) When the percentage change in the quantity supplied is less than the percentage change in price, the supply is

B) inelastic.

When the change in quantity is less than the change in price then the elasticity is inelastic

36) What is the formula for the cross elasticity of demand? The percentage change in the

A) quantity demanded divided by the percentage change in the price of a substitute or complement.

Cross elasticity measures the elasticity between related goods such as substitutes and complementary

37) If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent, then X and Y are

C) substitutes and the cross elasticity of demand equals 2.

The elasticity between substitutes is always positive

Ed=change in quantity.change in price = 2/1 = 2