A. Supply is more elastic in the short run than in the long run. B. Demand is mo

Question

A. Supply is more elastic in the short run than in the long run. B. Demand is more elastic in the short run than in the long run C. Demand is more elastic when a large number of substitute goods are available. D. Supply is more elastic when there are a small number of producers in the industry 8/ If price and total revenue vary in opposite directions, demand is: A. perfectly inelastic. B. perfectly elastic. C. relatively inelastic. D. relatively elastic. 9/ The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by A. 5 percent and quantity supplied rises by 7 percent. B. 8 percent and quantity supplied rises by 8 percent. C. 10 percent and quantity supplied remains the same D. 7 percent and quantity supplied rises by 5 percent. 10/ Suppose that the price of product X rises by 20 percent and the quantity supplied of X increases by 15 percent. The coefficient of price elasticity of supply for good x is: A. negative and therefore X is an inferior good. B. positive and therefore X is a normal good. C. less than 1 and therefore supply is inelastic. D. more than 1 and therefore supply is elastic. 1I/ The larger the positive cross elasticity coefficient of demand between products X and Y, the: A. stronger their complementariness B. greater their substitutability C. smaller the price elasticity of demand for both products. D. the less sensitive purchases of each are to increases in income. 12/ Which of the following goods (with their respective income elasticity coeficients in parentheses) will most likely suffer a decline in demand during a recession? A. Dinner at a nice restaurant (+1.8) B. Chicken purchased at the grocery store for preparation at home (+0.25) C. Facial tissue (+0.6) D. Plasma screen and LCD TVs (+4.2) 13/ Elasticity can be thought of as degree of relative: A. video brightness. B price bounce. C. audio volume. D quantity stretch.

Explanation / Answer

Question 7

Both demand and supply are less elastic in short-run relative to the long-run.

Greater the number of substitutes available, more elastic will be the demand.

Fewer the firms in the industry, inelastic will be the supply.

Hence, the correct answer is the option (C).

Question 8

In case of inelastic demand, increase in price increases total revenue and vice-versa.

In case of elastic demand, increase in price decreases total revenue and vice-versa.

So, if price and total revenue vary in opposite direction, demand is relatively elastic.

The correct answer is the option (D).

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