Question

If the price elasticity of demand is equal to 4, a 1% increase in price will cause the quantity demanded to ________ by ________ percent.

a) decrease; 25b) increase; 4c) decrease; ¼d) decrease; 4e) increase; 1/4

Answer

If the price elasticity of demand is equal to 4, a 1% increase in price will cause the quantity demanded to ________ by ________ percent.

a) decrease; 25b) increase; 4c) decrease; ¼d) decrease; 4 (Correct)e) increase; 1/4

Question

Which of the following statements about the price elasticity of demand is true?

a) Slope and elasticity measure the same things.b) Price elasticity of demand will vary depending on

how price and quantity are measured.c) It is important to know whether the price elasticity

of demand is a positive or negative number.d) The slope of a demand curve does not tell us the

price elasticity of demand.e) Price elasticity is the same everywhere along a

demand curve of any shape.

Answer

Which of the following statements about the price elasticity of demand is true?

a) Slope and elasticity measure the same things.b) Price elasticity of demand will vary depending on

how price and quantity are measured.c) It is important to know whether the price elasticity

of demand is a positive or negative number.d) The slope of a demand curve does not tell us the

price elasticity of demand. (Correct)e) Price elasticity is the same everywhere along a

demand curve of any shape.

Question

If a product has an inelastic demand, this means thata) consumers are relatively insensitive to a change

in the price of the product. b) producers are relatively sensitive to a change in

the quantity demanded.c) consumers are relatively sensitive to a change in

the price of the product.d) producers are relatively insensitive to a change

in the quantity demanded.e) consumers are relatively insensitive to a change

in the quantity demanded.

Answer

If a product has an inelastic demand, this means thata) consumers are relatively insensitive to a change

in the price of the product. (Correct)b) producers are relatively sensitive to a change in

the quantity demanded.c) consumers are relatively sensitive to a change in

the price of the product.d) producers are relatively insensitive to a change

in the quantity demanded.e) consumers are relatively insensitive to a change

in the quantity demanded.

Question

Carla buys one soft drink a day regardless of the price. Which of the following statements is correct with respect to Carla?

a) Price elasticity of demand for soft drinksis infinite.

b) Price elasticity of demand for soft drinksis zero.

c) Price elasticity of demand for soft drinks is 1.d) Cross-price elasticity of demand for soft drinks

is 1. e) Price elasticity of demand cannot be calculated

with the information given.

Answer

Carla buys one soft drink a day regardless of the price. Which of the following statements is correct with respect to Carla?

a) Price elasticity of demand for soft drinksis infinite.

b) Price elasticity of demand for soft drinksis zero. (Correct)

c) Price elasticity of demand for soft drinks is 1.d) Cross-price elasticity of demand for soft drinks

is 1. e) Price elasticity of demand cannot be calculated

with the information given.

Question

When the demand curve is a vertical line,demand is

a) relatively elastic.b) perfectly inelastic.c) unit-elastic.d) infinitely elastic.e) cross-elastic.

Answer

When the demand curve is a vertical line,demand is

a) relatively elastic.b) perfectly inelastic. (Correct)c) unit-elastic.d) infinitely elastic.e) cross-elastic.

Question

Suppose that the price of product G increases from $10 to $20 and, in response, quantity demanded declines from 100 to 80. Using the midpoint formula, what is the price elasticity of demand?

a) - 0.5b) - 3c) - 0.67d) - 0.33e) - 2

Answer

Suppose that the price of product G increases from $10 to $20 and, in response, quantity demanded declines from 100 to 80. Using the midpoint formula, what is the price elasticity of demand?

a) - 0.5b) - 3c) - 0.67d) - 0.33 (Correct)e) - 2

Question

If a consultant to a Major League Baseball team owner suggests that ticket prices be raised in order to increase revenue, the consultant must believe that the absolute value of the price elasticity of demand for baseball tickets is

a) equal to infinity.b) less than 1.c) greater than 1.d) equal to 1.e) There is not enough information provided to

answer this question.

Answer

If a consultant to a Major League Baseball team owner suggests that ticket prices be raised in order to increase revenue, the consultant must believe that the absolute value of the price elasticity of demand for baseball tickets is

a) equal to infinity.b) less than 1. (Correct)c) greater than 1.d) equal to 1.e) There is not enough information provided to

answer this question.

Question

The maximum number of seats at the University of Phoenix Stadium, the site for Super Bowl XLII, is 73,000. At this quantity, the price elasticity of supply for tickets is

a) very elastic.b) perfectly inelastic.c) perfectly elastic.d) infinite.e) 73,000.

Answer

The maximum number of seats at the University of Phoenix Stadium, the site for Super Bowl XLII, is 73,000. At this quantity, the price elasticity of supply for tickets is

a) very elastic.b) perfectly inelastic. (Correct)c) perfectly elastic.d) infinite.e) 73,000.

Question

Last year, Keith purchased 20 pounds of beef when his income was $30,000. This year his income is $40,000 and he purchased 40 pounds of beef. Which of the following statements is true?

a) Keith’s demand for beef is price inelastic. b) Beef and income are substitutes.c) Keith’s demand for beef is price elastic.d) Beef is a normal good.e) None of the above.

Answer

Last year, Keith purchased 20 pounds of beef when his income was $30,000. This year his income is $40,000 and he purchased 40 pounds of beef. Which of the following statements is true?

a) Keith’s demand for beef is price inelastic. b) Beef and income are substitutes.c) Keith’s demand for beef is price elastic.d) Beef is a normal good. (Correct)e) None of the above.

Question

For a given shift in demand, the less elastic is supply,

a) the greater is the shift in demand. b) the greater is the change in equilibrium

quantity.c) the smaller is the shift in demand.d) the greater is the change in price.e) the smaller is the change in price.

Answer

For a given shift in demand, the less elastic is supply,

a) the greater is the shift in demand. b) the greater is the change in equilibrium

quantity.c) the smaller is the shift in demand.d) the greater is the change in price. (Correct)e) the smaller is the change in price.

Question

Suppose that Bob increased his expenditures for comic books as his income increased. This implies that Bob considers comic books as

a) inferior goods and his income elasticity of demand for comic books is negative.

b) inferior goods and his income elasticity of demand for comic books is positive.

c) normal goods and his income elasticity of demand for comic books is negative.

d) normal goods and his income elasticity of demand for comic books is positive.

e) Inferior goods and his income elasticity of demand for comic books is zero.

Answer

Suppose that Bob increased his expenditures for comic books as his income increased. This implies that Bob considers comic books as

a) inferior goods and his income elasticity of demand for comic books is negative.

b) inferior goods and his income elasticity of demand for comic books is positive.

c) normal goods and his income elasticity of demand for comic books is negative.

d) normal goods and his income elasticity of demand for comic books is positive. (Correct)

e) Inferior goods and his income elasticity of demand for comic books is zero.