C4 : SET 3 - ELASTICITY OF DEMAND AND SUPPLY

“The percentage of change in quantity supplied is smaller than the percentage of change in price”. This statement refers to __________________.

• elastic.

• inelastic.

• perfectly elastic.

• perfectly inelastic.

A 3% increase in the price of tea causes a 6% increase in the demand for coffee. The cross elasticity of demand for coffee with respect to the price of tea is _____________.

• -0.5

• +0.5

• -2.0

• +2.0

The price elasticity of demand measure the ___________________.

• adaptability of suppliers when a change in demand alters the price of a good.

• responsiveness of quantity demanded to a change in a good’s price.

• responsiveness of a good’s price to a change in quantity demanded.

• responsiveness of quantity supplied to a change in quantity demanded.

If the income elasticity of demand for a good is greater than 0 but less than 1, then the good is_______________.

• an economic necessity.

• an economic luxury.

• provided by a monopoly producer.

• provider by a competitive producer.

Which of the following expressions represent a cross-price elasticity of demand?

• Percentage change in quantity demanded of sugar divided by percentage change in quantity supplied of sugar.

• Percentage change in quantity demanded of sugar divided by percent change in price of milk.

• Percentage change in price of sugar divided by percentage change in quantity demanded of sugar.

• Percentage change in quantity demanded of sugar divided by percentage change in income.

Cross elasticity of demand is _________________.

• percentage change in quantity demanded divided by the changes of price.

• percentage change in quantity demanded of goods Y divided by the change in quantity demanded of goods X.

• percentage change in quantity demanded of good X divided by

  the change in price of good X.

• percentage change in quantity demanded of good X divided by the change in price good Y.

The price of petrol increase from RM1.62 to RM1.92 per liter causes the total of quantity demand of vehicle decrease from 10,000 units to 8,000 units per year. Calculate the cross elasticity of demand between petrol and vehicle.

• - 0.95

• - 1.08

• - 1.68

• - 2.25

Elasticity of supply is ______________.

• measures the responsiveness of the quantity supplied due to a change in the price of a goods.

• measure the responsiveness of quantity demanded due to a change in its price.

• measure the responsiveness of quantity supplied of goods X due to change in the price of a goods Y.

• measure the responsiveness of quantity demanded of goods X due to change in the price of a goods Y.

Cross elasticity of demand is________________.

• negative for complementary goods.

• unitary for inferior goods.

• negative for substitute goods.

• positive for inferior goods.

A supply curve that is linear and parallel to the quantity axis has a value of elasticity that is _______________.

• equal to zero.

• infinity.

• less than one.

• one.