Question 1

The price elasticity of demand is expressed as the
A)percentage change in the quantity demanded divided by the percentage change in income.
B)percentage change in the price divided by the percentage change in the quantity demanded.
C)percentage change in the quantity demanded divided by the percentage change in the price.
D)percentage change in supply divided by the percentage change in demand.
E)absolute change in the quantity demanded divided by the absolute change in the price.

Accepted Answer

The price elasticity of demand is calculated as the percentage change in the quantity demanded divided by the percentage change in the price. This means that it measures the responsiveness or sensitivity of consumers' demand for a product in relation to changes in its price.

Question 2

Suppose there is a sudden decrease in the supply of oranges. Compare the effect of the change in orange supply on the price of oranges in a market with high demand elasticity and a market with low demand elasticity.

Accepted Answer

The answer of Suppose there is a sudden decrease in...

Question 3

If the price elasticity of demand is equal to 2, a 1 percent increase in price will cause the quantity demanded to ____ by ____ percent.
A)decrease; 5
B)increase; 2
C)decrease; 0.5
D)decrease; 2
E)increase; 0.5

Accepted Answer

A price elasticity of demand of 2 means that a 1 percent increase in price will cause a 2 percent decrease in quantity demanded (because the absolute value of elasticity is always used). Therefore, a 1 percent increase in price will cause the quantity demanded to decrease by 2 percent.

Question 4

If the demand for bananas has a high price elasticity, then a 5 percent decrease in the price of bananas will result in
A)a more than 5 percent increase in the quantity demanded.
B)a less than 5 percent increase in the quantity demanded.
C)no change in the quantity demanded.
D)a more than 5 percent decrease in the quantity demanded.
E)a less than 5 percent decrease in the quantity demanded.

Accepted Answer

If the demand for bananas has a high price elasticity, a small decrease in price will cause a relatively larger increase in the quantity demanded. This is because consumers are highly responsive to changes in price and will be more willing to purchase bananas at a lower price. Therefore, a 5 percent decrease in the price of bananas will result in a more than 5 percent increase in the quantity demanded.

Question 5

The concept of price elasticity of demand makes it possible to
A)predict how much demand will shift with a change in price.
B)predict how much price will change with a change in demand.
C)predict how much price will change with a change in supply.
D)predict how much supply will shift with a change in price.
E)anticipate shifts in demand.

Accepted Answer

The answer of The concept of price elasticity of demand...

Question 6

The price elasticity of demand measures
A)a buyer's responsiveness to a change in income.
B)a buyer's responsiveness to a change in price.
C)a seller's responsiveness to a change in demand.
D)how much price increases for a change in demand.
E)how much demand changes for a change in supply.

Accepted Answer

The price elasticity of demand measures the responsiveness of buyers to a change in price. It shows how much the quantity demanded changes in response to a change in price.

Question 7

Explain why economists care about the price elasticity of demand. What does it tell us?

Accepted Answer

The answer of Explain why economists care about the price...

Question 8

Does a price floor result in a shortage or a surplus? Why?

Accepted Answer

The answer of Does a price floor result in a...

Question 9

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

Accepted Answer

The size of the price elasticity of demand is a measure of how responsive consumers are to changes in the price of a good or service. When the demand elasticity is high, a small change in price will result in a larger change in quantity demanded, while when the demand elasticity is low, a change in price will have little effect on quantity demanded. Therefore, understanding the size of the price elasticity of demand is important in predicting how much the market price will change in response to a shift in the supply.

Question 10

By knowing the price elasticity of demand, economists can anticipate the size of shifts in the supply of a commodity, such as oil.

Accepted Answer

Price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good, not shifts in supply.

Question 11

Explain, in words, the difference between a low price elasticity of demand and a high price elasticity of demand for a 15 percent increase in price.

Accepted Answer

The answer of Explain, in words, the difference between a...

Question 12

If the price elasticity of demand for apples is higher than the price elasticity of demand for oranges, then a given percentage increase in the price of apples and oranges will result in more percentage decrease in the quantity demanded for apples than for oranges.

Accepted Answer

This statement is true as it implies that the demand for apples is more sensitive to price changes than the demand for oranges. Higher price elasticity of demand means that a small change in price will result in a proportionately larger change in the quantity demanded. Therefore, a given percentage increase in the price of apples and oranges will result in a larger percentage decrease in the quantity demanded for apples than for oranges.

Question 13

By knowing how much quantity demanded changes for a given change in price, we can also know
A)exactly which individuals will or will not continue to buy a good whose price has increased.
B)how much quantity supplied changes for a given change in price.
C)how much price changes when the amount of a good available for sale changes.
D)how much supply changes for a given change in price.
E)how much demand changes for a given change in price.

Accepted Answer

The answer of By knowing how much quantity demanded changes...

Question 14

A given change in oil supply will result in a smaller change in the equilibrium price of oil if the
A)price elasticity of demand for oil is higher.
B)price elasticity of demand for oil is lower.
C)income elasticity for oil is higher.
D)income elasticity for oil is lower.
E)demand for oil is not sensitive to the price of oil.

Accepted Answer

When the price elasticity of demand for oil is higher, it means consumers are more responsive to changes in price. Therefore, a change in oil supply will result in a smaller change in the equilibrium price because consumers will adjust their consumption more readily in response to price changes.

Question 15

For a given reduction in the supply of oil, the equilibrium price of oil will
A)decrease by a larger amount for a higher price elasticity of demand.
B)decrease by a smaller amount for a higher price elasticity of demand.
C)increase by a larger amount for a higher price elasticity of demand.
D)increase by a smaller amount for a higher price elasticity of demand.
E)not change, regardless of the price elasticity of demand.

Accepted Answer

When demand is more elastic, consumers are more responsive to price changes, so a reduction in supply leads to a smaller increase in equilibrium price.

Question 16

Suppose that the government imposes a sales tax on the consumption of soda drinks, which of the following would have the least impact on the producers of soda drinks?
A)Perfectly elastic demand
B)Perfectly inelastic demand
C)Unitary elastic demand
D)Zero demand
E)Plastic is an inferior good.

Accepted Answer

When demand for a good is perfectly inelastic, consumers will continue to buy the same amount of the good regardless of changes in price. Therefore, the producers of soda drinks will not feel the impact of the sales tax since consumers will continue to purchase the same amount at the same price.

Question 17

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

Accepted Answer

The size of price elasticity of demand is a key factor in determining the extent to which a change in supply will affect market price. When demand is elastic (i.e. price sensitive), a small change in supply can cause a relatively large change in price. Conversely, when demand is inelastic (i.e. less price sensitive), a change in supply will have less impact on price.

Question 18

To say that gasoline has a low price elasticity of demand is to say the quantity demanded of gasoline
A)has a relatively flat demand curve.
B)has a horizontal demand curve.
C)is not sensitive to changes in gasoline prices.
D)is very sensitive to changes in gasoline prices.
E)is very sensitive to changes in consumer income.

Accepted Answer

A low price elasticity of demand means that the quantity demanded is not very sensitive to changes in price. In other words, even if the price of gasoline goes up, people will still need to buy it for transportation, and may not drastically reduce their consumption. Conversely, if the price goes down, people may not drastically increase their consumption because they may not need more gasoline than they already use.

Question 19

Assume that the price elasticity of demand equals 0.4 (e_d = 0.4). Given a 10 percent increase in price, there will be a A)40 percent increase in the quantity demanded. B)4 percent decrease in the quantity demanded. C)40 percent decrease in the quantity demanded. D)4 percent increase in the quantity demanded. E)2.5 percent decrease in the quantity demanded.

Accepted Answer

The price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. With an elasticity of 0.4, a 10 percent increase in price leads to a 4 percent decrease in quantity demanded (0.4 * 10% = 4%).

Question 20

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

Accepted Answer

This is the formula for price elasticity of demand, and it measures the responsiveness of quantity demanded to changes in price.

Quiz 4: Subtleties of the Supply and Demand Model

The price elasticity of demand is expressed as the

Suppose there is a sudden decrease in the supply of oranges. Compare the effect of the change in orange supply on the price of oranges in a market with high demand elasticity and a market with low demand elasticity.

If the price elasticity of demand is equal to 2, a 1 percent increase in price will cause the quantity demanded to by percent.

If the demand for bananas has a high price elasticity, then a 5 percent decrease in the price of bananas will result in

The concept of price elasticity of demand makes it possible to

The price elasticity of demand measures

Explain why economists care about the price elasticity of demand. What does it tell us?

Does a price floor result in a shortage or a surplus? Why?

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

By knowing the price elasticity of demand, economists can anticipate the size of shifts in the supply of a commodity, such as oil.

Explain, in words, the difference between a low price elasticity of demand and a high price elasticity of demand for a 15 percent increase in price.

If the price elasticity of demand for apples is higher than the price elasticity of demand for oranges, then a given percentage increase in the price of apples and oranges will result in more percentage decrease in the quantity demanded for apples than for oranges.

By knowing how much quantity demanded changes for a given change in price, we can also know

A given change in oil supply will result in a smaller change in the equilibrium price of oil if the

For a given reduction in the supply of oil, the equilibrium price of oil will

Suppose that the government imposes a sales tax on the consumption of soda drinks, which of the following would have the least impact on the producers of soda drinks?

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

To say that gasoline has a low price elasticity of demand is to say the quantity demanded of gasoline

Assume that the price elasticity of demand equals 0.4 (e_d = 0.4) . Given a 10 percent increase in price, there will be a

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

Quiz 4: Subtleties of the Supply and Demand Model

The price elasticity of demand is expressed as the

Suppose there is a sudden decrease in the supply of oranges. Compare the effect of the change in orange supply on the price of oranges in a market with high demand elasticity and a market with low demand elasticity.

If the price elasticity of demand is equal to 2, a 1 percent increase in price will cause the quantity demanded to ____ by ____ percent.

If the demand for bananas has a high price elasticity, then a 5 percent decrease in the price of bananas will result in

The concept of price elasticity of demand makes it possible to

The price elasticity of demand measures

Explain why economists care about the price elasticity of demand. What does it tell us?

Does a price floor result in a shortage or a surplus? Why?

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

By knowing the price elasticity of demand, economists can anticipate the size of shifts in the supply of a commodity, such as oil.

Explain, in words, the difference between a low price elasticity of demand and a high price elasticity of demand for a 15 percent increase in price.

If the price elasticity of demand for apples is higher than the price elasticity of demand for oranges, then a given percentage increase in the price of apples and oranges will result in more percentage decrease in the quantity demanded for apples than for oranges.

By knowing how much quantity demanded changes for a given change in price, we can also know

A given change in oil supply will result in a smaller change in the equilibrium price of oil if the

For a given reduction in the supply of oil, the equilibrium price of oil will

Suppose that the government imposes a sales tax on the consumption of soda drinks, which of the following would have the least impact on the producers of soda drinks?

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

To say that gasoline has a low price elasticity of demand is to say the quantity demanded of gasoline

Assume that the price elasticity of demand equals 0.4 (ed = 0.4) . Given a 10 percent increase in price, there will be a

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

If the price elasticity of demand is equal to 2, a 1 percent increase in price will cause the quantity demanded to by percent.

Assume that the price elasticity of demand equals 0.4 (e_d = 0.4) . Given a 10 percent increase in price, there will be a