PES
What equation would you use to calculate the PES of good X?
% change in Qs good X / % change in P good X
Which of the following is not true about YED?
A.Inferior goods have a YED of 0
B. Normal goods have a positive YED
C. Luxury goods have a YED of greater than 1
D. Necessity goods have a YED of between 0 and 1
A.Inferior goods have a YED of 0
Which of the following equations is used to calculate the PED for good A?
A. % change in P B / % change in Qd A
B.% change in Qd A / % change in P A
C. change in Qd A / change in P A
D. % change in Qd A / % change in P B
B.% change in Qd A / % change in P A
If the PES of agricultural good A is 0.6 and the price of good increased from $3 per unit to $3.6 per unit, what is the % change in quantity supplied?
12%
Calculate the change in household income if the quantity demanded for good B falls by 6% and its YED is -1.2.
A. -0.5
B. -5.0
C. +5.0
D. 0.5
C. +5.0
If the price of a type of pizza rises from $8 to $9 and its quantity demanded falls from 20,000 units to 16,000 units, what is the PED for this type of pizza?
A. 0.16
B. 6.25
C. 1.6
D. 0.625
C. 1.6
Which of the following is the best explanation of why agricultural goods often have a PES of below 1?
A.It is easy to carry large stocks of agricultural goods
B.The output of farmed goods is often restricted by their growing season
C.Labour supply is readily available in agricultural markets
D.Demand for an agricultural good is normally inelastic
The output of farmed goods is often restricted by their growing season
Which of the following best describes an inferior good?
A. A good that is only bought by low-income families
B. A good for where demand falls as income rises
C. A good that is very low quality
D. A good with a YED of less than 1
B. A good for where demand falls as income rises
Which the following would not be a reason why the PED of a commodity such as rice tends to be price inelastic?
A.Rice has few close substitutes
B.Rice can account for a high proportion of household incomes
C.Rice is a relative necessity
D.Rice can have a relatively low price
B.Rice can account for a high proportion of household incomes
A toy manufacturer estimates the price elasticity of supply of its product is +1.2 and the firm’s current level of output is 2.5 million units. If the price of toys increases by 5%, the manufacturer’s output would be expected to increase to:
A. 2.625 million units
B. 2.65 million units
C. 3.00 million units
D. 2.604 million units
2.65 million units
When countries experience a rise in income over time which of the following sectoral changes is most likely to occur?
A. The car manufacturing sector's output as a % of GDP will decrease
B. The tourism sector's output as a % of GDP will increase
C. The consumer electronics sector's output as a % of GDP will decrease
D. The agricultural sector's output as a % of GDP will increase
B. The tourism sector's output as a % of GDP will increase
If the PED of a good is -0.4 and the quantity demand increases by 22% when the price of the good changed. Which of the following is the percentage change in price?
A. +55%
B. -55%
C. -8.8%
D.+8.8%
B. -55%
Which of the following is most likely to cause the price elasticity of supply in a market to fall?
A. A fall in stock levels
B. An increase in the supply of labour
C. New firms enter the market
D. An increase in spare production capacity
A. A fall in stock levels
It is estimated that apple juice has an income elasticity of demand of 0.2. Based on this information, which of the following is most likely to be true?
A. Apple juice accounts for a small proportion of household expenditure
B. Apple juice has few close substitutes
C. Apple juice is a necessity good
D. Apple juice is an inferior good
C. Apple juice is a necessity good
A hotel discounted its room rates at weekends from $100 per night to $60 and total revenue for the hotel at the weekend increased from $8,500 to $11,300. Which of the following is most likely to be the price elasticity of demand for the hotel rooms at weekends?
A. Price elastic
B. Price inelastic
C. Unit elastic
D. Perfectly elastic
A. Price elastic