Question 1

A perfectly elastic demand curve is a horizontal line.

Accepted Answer

A perfectly elastic demand curve means that any increase or decrease in price will result in an infinite change in quantity demanded. This results in a horizontal line because the quantity demanded varies infinitely with price but price remains constant.

Question 2

Define price elasticity of demand.What does it measure?

Accepted Answer

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Question 3

Recall the Application regarding how the price elasticity of demand for gasoline varies over time.Based on the application,in the long run consumers have time respond to changes in price and the demand for gasoline is:
A)more elastic.
B)inelastic.
C)unit elastic.
D)less elastic

Accepted Answer

In the long run, consumers have the opportunity to make adjustments to their behavior and purchase decisions, such as buying a more fuel-efficient vehicle or relocating closer to work. This increased flexibility leads to a greater responsiveness to changes in price, making the demand for gasoline more elastic.

Question 4

The price elasticity of demand is constant along a downward-sloping linear demand curve.

Accepted Answer

The price elasticity of demand varies along a downward-sloping linear demand curve, becoming more elastic as price decreases and quantity demanded increases.

Question 5

Another word for elasticity would be flexibility.

Accepted Answer

The answer of Another word for elasticity would be flexibility....

Question 6

If the price elasticity of demand is 3 then this means that a one-percentage increase in quantity demanded will cause a three-percentage decrease in the price of the good.

Accepted Answer

The price elasticity of demand of 3 means that a 1% decrease in price will cause a 3% increase in quantity demanded. This is because the demand for the good is relatively elastic, meaning that a small change in price will cause a larger change in quantity demanded.

Question 7

When the price of toothpaste increases by 15 percent,the quantity of toothpaste demanded falls by 30 percent.Calculate the price elasticity of demand.Is the demand for toothpaste elastic,inelastic,or unit elastic?

Accepted Answer

The answer of When the price of toothpaste increases by...

Question 8

Which is likely to be more elastic: the demand for orange juice or the demand for a particular brand of orange juice? Explain.

Accepted Answer

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Question 9

How does one determine whether demand is elastic,inelastic,or unitary elastic?

Accepted Answer

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Question 10

The price of cabbage rises from $0.20 per pound to $0.30 per pound.The quantity of cabbage demanded falls from 800 pounds per week to 600 pounds per week.Use the initial value formula to calculate the price elasticity of demand for cabbage.Is the demand elastic,inelastic,or unit elastic?

Accepted Answer

The answer of The price of cabbage rises from $0.20...

Question 11

The price elasticity of demand is measured by dividing the percentage change in quantity demanded by the percentage change in price.

Accepted Answer

This is the true definition of price elasticity of demand. It is a measure of how sensitive the demand for a good or service is to a change in its price.

Question 12

If the price elasticity of demand for peanuts is 0.4,then the demand is inelastic.

Accepted Answer

A price elasticity of demand of 0.4 indicates that a 1% increase in the price of peanuts will lead to a less than 1% decrease in the quantity demanded. This means that the demand for peanuts is relatively insensitive to changes in price, which is characteristic of inelastic demand.

Question 13

-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $6 to $7,the price elasticity of demand equals:
A)0.13.
B)0.33.
C)1.44.
D)13.

Accepted Answer

The answer of 
-Refer to Figure 5.5.Using the midpoint method,if...

Question 14

Based on the determinants of elasticity as discussed in the text,explain what the price elastic of demand of the following products would be: a)diamond rings;and b)salt.

Accepted Answer

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Question 15

If the price elasticity of demand is 2 then a 4% increase in the price of the product can be expected to reduce quantity demanded by 8%.

Accepted Answer

The price elasticity of demand of 2 indicates that a 1% increase in price would result in a 2% decrease in quantity demanded. So, a 4% increase in price would result in an 8% decrease in quantity demanded (4 x 2 = 8).

Question 16

If the price of organic milk increases by 10% and quantity demanded falls by 20%,then the price elasticity of demand for organic milk is 2.

Accepted Answer

The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price. In this case, the price of organic milk increases by 10% and the quantity demanded falls by 20%. Therefore, the price elasticity of demand can be calculated as:

Elasticity = (Percentage change in quantity demanded) / (Percentage change in price)

Elasticity = (-20%) / (10%)

Elasticity = -2

Since the price elasticity of demand is a negative value, we consider its absolute value, which is 2. This means that the demand for organic milk is relatively elastic, indicating that a small change in price causes a relatively larger change in quantity demanded.

Question 17

Suppose that the price of a pound of potatoes increases from $0.75 to $0.90 and quantity demanded falls from 10,000 pounds to 8,000 pounds.Use the initial value method to calculate the price elasticity of demand.

Accepted Answer

The answer of Suppose that the price of a pound...

Question 18

What does elasticity measure?

Accepted Answer

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Question 19

List two determinants of price elasticity of demand.

Accepted Answer

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Question 20

The price elasticity of demand for gasoline is 0.8.What must occur to the price of gasoline in order for quantity demanded to rise by 20 percent?

Accepted Answer

The answer of The price elasticity of demand for gasoline...

Quiz 5: Elasticity: a Measure of Responsiveness