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The demand for gasoline is perfectly inelastic because most people need gasoline to drive their cars.

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Table 6.1 The publisher of a magazine gives his staff the following information:  Current price $2,00 per issue  Current sales 150,000 copies per month  Current revenue $300,000 per month  Current total costs $450,000 per month \begin{array}{|l|l|}\hline \text { Current price } & \$ 2,00 \text { per issue } \\\hline \text { Current sales } & 150,000 \text { copies per month } \\\hline \text { Current revenue } & \$ 300,000 \text { per month } \\\hline \text { Current total costs } & \$ 450,000 \text { per month } \\\hline\end{array} He tells the staff, "Our costs are currently $150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to $3.00 per issue. This will result in our revenue being exactly equal to our cost." -Refer to Table 6.1.Which of the following statements is correct?


A) The publisher's analysis is correct only if the demand is perfectly elastic.
B) The publisher's analysis is correct only if the demand is elastic.
C) The publisher's analysis is correct only if the demand is perfectly inelastic.
D) The publisher's analysis is correct only if the demand is unit-elastic.

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Figure 6.4 Figure 6.4 -Refer to Figure 6.4.At the midpoint of the demand curve, in absolute value, A) the price elasticity coefficient is at a maximum. B) the price elasticity coefficient is at a minimum. C) the price elasticity coefficient is zero. D) the price elasticity coefficient is one. -Refer to Figure 6.4.At the midpoint of the demand curve, in absolute value,


A) the price elasticity coefficient is at a maximum.
B) the price elasticity coefficient is at a minimum.
C) the price elasticity coefficient is zero.
D) the price elasticity coefficient is one.

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When demand is elastic, a fall in price causes total revenue to rise because


A) when price falls, quantity sold increases so total revenue automatically rises.
B) the increase in quantity sold is large enough to offset the lower price.
C) the percentage increase in quantity demanded is less than the percentage fall in price.
D) the demand curve shifts.

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Table 6.1  Price per Pound  (dollars)   Quantity of Cheese  Demanded (pounds)  $163144125106876849210\begin{array}{|c|c|}\hline \begin{array}{c}\text { Price per Pound } \\\text { (dollars) }\end{array} & \begin{array}{c}\text { Quantity of Cheese } \\\text { Demanded (pounds) }\end{array} \\\hline \$ 16 & 3 \\\hline 14 & 4 \\\hline 12 & 5 \\\hline 10 & 6 \\\hline 8 & 7 \\\hline 6 & 8 \\\hline 4 & 9 \\\hline 2 & 10 \\\hline\end{array} -Refer to Table 6.1.Over what range of prices is the demand inelastic?


A) over the entire range of prices
B) between $12 and $16
C) between $8 and $16
D) between $2 and $8

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When Audrina raised the price of her home made cookies, her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

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Studies show that the income elasticity of demand for wine is approximately five.What does this mean?


A) A one percent decrease in the price of wine leads to a five percent increase in wine consumption.
B) A one percent increase in income leads to a five percent increase in wine consumption.
C) A five percent increase in income leads to a one percent increase in wine consumption.
D) Wine is a relatively elastic good.

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Explain the economic concept of price elasticity of supply.How is price elasticity of supply calculated?

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Price elasticity of supply refers to the...

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The price elasticity of supply is equal to


A) the value of the slope of the supply curve.
B) the change in quantity supplied divided by the change in price.
C) the percentage change in price divided by the percentage change in quantity supplied.
D) the percentage change in quantity supplied divided by the percentage change in price.

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If the cross-price elasticity of demand between Breeze Detergent and Faber Detergent is a relatively large positive number, then it indicates that


A) the two brands are probably made by the same company.
B) the two brands of detergent are close substitutes.
C) consumers have a distinct preference for one brand versus the other.
D) detergents are necessities.

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Which of the following goods would have the most inelastic demand?


A) ski vacations
B) bread
C) luxury cars
D) big screen TVs

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If a firm is in an antitrust court case being accused of monopolizing a product, the firm would hire an economist to show


A) the cross-price elasticity of demand between the firm's good and another is negative.
B) the cross-price elasticity of demand between the firm's good and another is positive.
C) the price elasticity of demand for the firm's good is highly inelastic.
D) the income elasticity of the firm's good is inferior.

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A service station owner in Prince George, British Columbia, was worried that raising the price of gasoline would cause the quantity demanded to fall by so much that he would be in a worse situation than if he did not raise the price.If raising the price of gasoline would cause the owner to receive less total revenue from the sale of gasoline, the demand for gasoline is


A) elastic.
B) inelastic.
C) unit elastic.
D) perfectly inelastic.

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The cross-price elasticity of demand between an unlimited texting option and an unlimited call minutes option offered from a cell phone provider would be


A) positive if subscribers consider the services substitutes for each other.
B) positive if subscribers consider the services complements to each other.
C) negative if subscribers consider the services substitutes for each other.
D) negative no matter if subscribers consider the services substitutes or complements for each other.

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The price elasticity of supply for umbrellas is 2.Suppose you're told that following a price increase, quantity supplied increased by 30 percent.What was the percentage change in price that brought this about?


A) 60 percent
B) 15 percent
C) 6.7 percent
D) impossible to determine without additional information

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Which of the following is one reason why the income of small family farms has decreased over time?


A) Decreased capital costs and increased labour costs has made it easier for small farms to compete with large ones.
B) The demand for farm products is price elastic.
C) The demand for farm products is income inelastic.
D) The Canadian population has increased greatly since 1960.

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Figure 6.7 Figure 6.7 -Refer to Figure 6.7.What is the value of the price elasticity of supply between g and h? A) 20 percent B) 0.5 C) 2 D) 0.02 -Refer to Figure 6.7.What is the value of the price elasticity of supply between g and h?


A) 20 percent
B) 0.5
C) 2
D) 0.02

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For people who live near a bus route, a subway station, or a commuter rail line, public transportation provides a substitute to driving their own cars.So, for these people, the cross-price elasticity of demand between gasoline and public transportation is


A) positive.
B) negative.
C) zero.
D) infinity.

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If a firm wanted to know whether the demand for its product was elastic, unit-elastic, or inelastic, then the firm could


A) survey competitors and ask them what they think demand elasticity is for the product.
B) talk to its customers.
C) change price a little bit and observe what happens to total revenue.
D) not do anything as there is no way to find an elasticity value.

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Between 1931 and 2014 the number of acres devoted to wheat production in Canada ________ and the price of wheat ________.


A) declined; increased
B) more than doubled; increased by about 50 percent
C) declined; more than doubled
D) increased; more than doubled

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