Question 1

. Suppose the price elasticity of demand for apples is 2.1 and the price elasticity of demand for housing is 0.62. In comparing price elasticities of demand, it is proper to say that the demand for apples is

Accepted Answer

The price elasticity of demand for apples (2.1) is greater than that for housing (0.62), which means that the demand for apples is more responsive to changes in price than the demand for housing. Therefore, the demand for apples is more elastic than the demand for housing. Option A and C are both incorrect because they suggest that the demand for one of the goods is inelastic and the other is elastic, but neither is the case. Option D is incorrect because it suggests that the demand for apples is more inelastic than the demand for housing, when in fact it is the opposite. Option E is also incorrect for the same reason as A and C.

Question 2

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

Accepted Answer

Since Carla buys one soft drink a day regardless of the price, her demand for soft drinks is completely inelastic, meaning the price elasticity of demand is zero.

Question 3

If a 3 percent change in price results in a 1.5 percent change in quantity demanded, then the price elasticity of demand is ____ and demand is ____.

Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price, which is 1.5/3 = 0.5 or 1/2. Since the value is less than 1, demand is considered inelastic.

Question 4

Exhibit 4-2
 
-In Exhibit 3-4, which of the following demand curve has the highest price elasticity of demand?

Accepted Answer

The answer of Exhibit 4-2
 
-In Exhibit 3-4, which of...

Question 5

The elasticity of demand changes

Accepted Answer

The elasticity of demand changes along a linear, downward-sloping demand curve because it is determined by the slope of the curve. At higher prices, demand tends to be more elastic, while at lower prices, it tends to be more inelastic. This means that the elasticity of demand changes at different points along the curve. A vertical demand curve has perfectly inelastic demand, while a horizontal demand curve has perfectly elastic demand, so the elasticity does not change along these curves. The elasticity of demand also does not change along a supply curve, as this represents the behavior of producers rather than consumers. Finally, while shifts in the demand curve can affect the elasticity of demand, they do not in themselves change it.

Question 6

Suppose one market demand (D₁) has a price elasticity of .65 and a second market demand (D₂) has a price elasticity of .80. In comparing price elasticities of demand, it is proper to say that

Accepted Answer

Since the price elasticity of D₂ is higher than that of D₁, it means that D₂ is more responsive to price changes, making it more elastic. Therefore, option D is the correct answer.

Question 7

When the demand curve is a vertical line, demand is

Accepted Answer

A vertical demand curve indicates that quantity demanded does not change in response to changes in price, meaning that demand is perfectly inelastic.

Question 8

A product with an elastic demand means that

Accepted Answer

An elastic demand means that consumers are relatively sensitive to a change in the price of the product. This means that a small change in price could lead to a big change in the quantity demanded. On the other hand, a product with an inelastic demand means that consumers are relatively insensitive to a change in the price of the product, and a change in price does not have a significant effect on the quantity demanded.

Question 9

If demand is perfectly inelastic, then the

Accepted Answer

Perfectly inelastic demand means that consumers are completely insensitive to changes in price and their quantity demanded remains the same no matter what the price is. Therefore, the answer is A - quantity demanded does not change when price changes.

Question 10

A horizontal demand curve is

Accepted Answer

A horizontal demand curve is perfectly elastic because even a slight change in price will cause consumers to switch to a substitute product.

Question 11

For demand to be elastic,

Accepted Answer

Elastic demand means that the quantity demanded changes significantly in response to a relatively small change in price. This is represented by a situation where the percentage change in quantity demanded is greater than the associated percentage change in price.

Question 12

For demand to be unit elastic,

Accepted Answer

Unit elastic demand occurs when the percentage change in quantity demanded is exactly equal to the percentage change in price. This means that as the price changes, the quantity demanded changes in the opposite direction by the same percentage, resulting in a constant total revenue.

Question 13

If the percentage change in quantity demanded is greater than the percentage change in the price for a good, then the demand for the good is elastic.

Accepted Answer

This is the definition of elastic demand - when the percentage change in quantity demanded is greater than the percentage change in price. When demand is elastic, a small change in price can lead to a larger change in the quantity demanded.

Question 14

If the price elasticity of demand is 5.3, demand is said to be

Accepted Answer

A price elasticity of demand greater than 1 indicates that demand is sensitive to price changes, making it elastic. At a price elasticity of demand of 5.3, a 1% increase in price will result in a 5.3% decrease in quantity demanded, showing high sensitivity to price changes.

Question 15

A product with an inelastic demand means that

Accepted Answer

Inelastic demand means that consumers are relatively insensitive to a change in the price of the product. This means that even if the price of the product increases, consumers will still continue to purchase it. Therefore, the demand remains relatively unchanged even with a change in price.

Question 16

For demand to be inelastic,

Accepted Answer

Inelastic demand refers to a situation where the percentage change in quantity demanded is less than the percentage change in price. This means that even if the price of a good or service increases, the quantity demanded will not decrease proportionally, hence making the demand inelastic.

Question 17

A perfectly elastic demand curve has a price elasticity

Accepted Answer

A perfectly elastic demand curve means that the quantity demanded changes infinitely in response to a small change in price. Therefore, the price elasticity of demand is equal to infinity.

Question 18

If the price of a product increases by 10 percent and the quantity demanded decreases by 15 percent, then the

Accepted Answer

If a small increase in price leads to a proportionately larger decrease in quantity demanded, then the product is said to have an elastic demand. In this case, a 10% increase in price leads to a 15% decrease in quantity demanded, which means the product has an elastic demand. Therefore, the best choice is A.

Question 19

A perfectly inelastic demand curve has a price elasticity

Accepted Answer

A perfectly inelastic demand curve means that the quantity demanded does not change regardless of price changes, resulting in a price elasticity of zero.

Question 20

Good X has a high price elasticity of demand; it is most likely that

Accepted Answer

A high price elasticity of demand means that consumers are quite responsive to changes in price, and are more likely to switch to substitutes if the price of good X increases. Therefore, if good X has a lot of substitutes, consumers have many options to turn to if the price of good X becomes too high, making it more likely that demand for good X is elastic.

Quiz 4: Subtleties of the Supply and Demand Model

. Suppose the price elasticity of demand for apples is 2.1 and the price elasticity of demand for housing is 0.62. In comparing price elasticities of demand, it is proper to say that the demand for apples is

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

If a 3 percent change in price results in a 1.5 percent change in quantity demanded, then the price elasticity of demand is and demand is .

Exhibit 4-2 -In Exhibit 3-4, which of the following demand curve has the highest price elasticity of demand?

The elasticity of demand changes

Suppose one market demand (D₁) has a price elasticity of .65 and a second market demand (D₂) has a price elasticity of .80. In comparing price elasticities of demand, it is proper to say that

When the demand curve is a vertical line, demand is

A product with an elastic demand means that

If demand is perfectly inelastic, then the

A horizontal demand curve is

For demand to be elastic,

For demand to be unit elastic,

If the percentage change in quantity demanded is greater than the percentage change in the price for a good, then the demand for the good is elastic.

If the price elasticity of demand is 5.3, demand is said to be

A product with an inelastic demand means that

For demand to be inelastic,

A perfectly elastic demand curve has a price elasticity

If the price of a product increases by 10 percent and the quantity demanded decreases by 15 percent, then the

A perfectly inelastic demand curve has a price elasticity

Good X has a high price elasticity of demand; it is most likely that

Quiz 4: Subtleties of the Supply and Demand Model

. Suppose the price elasticity of demand for apples is 2.1 and the price elasticity of demand for housing is 0.62. In comparing price elasticities of demand, it is proper to say that the demand for apples is

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

If a 3 percent change in price results in a 1.5 percent change in quantity demanded, then the price elasticity of demand is ____ and demand is ____.

Exhibit 4-2 -In Exhibit 3-4, which of the following demand curve has the highest price elasticity of demand?

The elasticity of demand changes

Suppose one market demand (D1) has a price elasticity of .65 and a second market demand (D2) has a price elasticity of .80. In comparing price elasticities of demand, it is proper to say that

When the demand curve is a vertical line, demand is

A product with an elastic demand means that

If demand is perfectly inelastic, then the

A horizontal demand curve is

For demand to be elastic,

For demand to be unit elastic,

If the percentage change in quantity demanded is greater than the percentage change in the price for a good, then the demand for the good is elastic.

If the price elasticity of demand is 5.3, demand is said to be

A product with an inelastic demand means that

For demand to be inelastic,

A perfectly elastic demand curve has a price elasticity

If the price of a product increases by 10 percent and the quantity demanded decreases by 15 percent, then the

A perfectly inelastic demand curve has a price elasticity

Good X has a high price elasticity of demand; it is most likely that

If a 3 percent change in price results in a 1.5 percent change in quantity demanded, then the price elasticity of demand is and demand is .

Suppose one market demand (D₁) has a price elasticity of .65 and a second market demand (D₂) has a price elasticity of .80. In comparing price elasticities of demand, it is proper to say that