Question 1

Demand determines ________ entirely when ________ is perfectly inelastic.
A) quantity; supply
B) price and quantity; supply
C) price; supply
D) price and quantity; demand

Accepted Answer

Price is determined entirely by demand when supply is perfectly inelastic because the quantity supplied does not change in response to changes in price.

Question 2

Demand determines price entirely when
A) demand is downward sloping.
B) demand is perfectly inelastic.
C) supply is perfectly inelastic.
D) supply is perfectly elastic.

Accepted Answer

C

Question 3

Refer to the information provided in Figure 5.1 below to answer the question(s) that follow.  Figure 5.1
-Refer to Figure 5.1. The price elasticity of demand for tickets
A) is equal to zero.
B) is equal to 1.
C) is infinity.
D) varies at every point along the demand curve.

Accepted Answer

A

Question 4

When the price of oysters decreases 25%, quantity demanded increases 10%. The price elasticity of demand for oysters is ________ and total revenue from oyster sales will ________.
A) inelastic; increase
B) inelastic; decrease
C) elastic; decrease
D) elastic; increase

Accepted Answer

The answer of When the price of oysters decreases 25%,...

Question 5

A government wants to reduce electricity consumption by 10%. The price elasticity of demand for electricity is -5. The government must ________ the price of electricity by ________.
A) raise; 2.0%
B) raise; 0.5%
C) raise; 1.25%
D) lower; 0.5%

Accepted Answer

To achieve a 10% reduction in electricity consumption with a price elasticity of demand of -5, the price must be raised by 2.0%. This is calculated by dividing the desired percentage change in quantity (-10%) by the elasticity (-5), resulting in a 2% increase in price.

Question 6

When the price of coffee increases 5%, quantity demanded decreases 10%. The price elasticity of demand for coffee is ________ and total revenue from coffee sales will ________.
A) inelastic; increase
B) inelastic; decrease
C) elastic; increase
D) elastic; decrease

Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is -10%/5% = -2, which indicates elasticity (absolute value greater than 1). When demand is elastic, an increase in price leads to a decrease in total revenue.

Question 7

Refer to the information provided in Figure 5.1 below to answer the question(s) that follow.  Figure 5.1
-Refer to Figure 5.1. The demand for tickets is
A) perfectly price elastic.
B) perfectly price inelastic.
C) unit price elastic.
D) perfectly income inelastic.

Accepted Answer

Perfectly price inelastic demand means that the quantity demanded does not change as the price changes. This is typically represented by a vertical demand curve, indicating that consumers will buy the same amount regardless of the price.

Question 8

A government wants to reduce electricity consumption by 5%. The price elasticity of demand for electricity is -0.5. The government must ________ the price of electricity by ________.
A) raise; 10.0%
B) raise; 1.0%
C) raise; 0.1%
D) lower; 0.5%

Accepted Answer

The price elasticity of demand formula is percentage change in quantity demanded divided by percentage change in price. To achieve a 5% reduction in quantity demanded with a price elasticity of -0.5, the price must be raised by 10% (5% / -0.5 = -10%).

Question 9

A perfectly price elastic demand curve will be a ________ line.
A) horizontal
B) vertical
C) positively sloped
D) negatively sloped

Accepted Answer

A perfectly price elastic demand curve is horizontal, indicating that consumers are willing to purchase any quantity at a specific price, but no quantity at a price even slightly higher.

Question 10

The price elasticity of demand for kale in Texas is -2, and the price elasticity of demand for kale in California is -0.5. In other words, demand in Texas is ________, and demand in California is ________.
A) elastic; inelastic
B) inelastic; elastic
C) elastic; unit elastic
D) inelastic; unit inelastic

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. A price elasticity greater than 1 (in absolute value) indicates elastic demand, meaning consumers are highly responsive to price changes. A price elasticity less than 1 (in absolute value) indicates inelastic demand, meaning consumers are less responsive to price changes. Since -2 (Texas) indicates a higher responsiveness than -0.5 (California), demand in Texas is elastic, and demand in California is inelastic.

Question 11

When the price of coffee decreases 5%, quantity demanded increases 5%. The price elasticity of demand for coffee is ________ and total revenue from coffee sales will ________.
A) elastic; decrease
B) elastic; increase
C) inelastic; decrease
D) unit elastic; not change

Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, both are 5%, making the elasticity 1, or unit elastic. When demand is unit elastic, a change in price does not affect total revenue, hence it will not change.

Question 12

When the price of tea decreases 7%, quantity demanded increases 12%. The price elasticity of demand for tea is ________ and total revenue from tea sales will ________.
A) inelastic; increase
B) inelastic; decrease
C) elastic; increase
D) elastic; decrease

Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is |12% / -7%| = 1.71, which is greater than 1, indicating demand is elastic. When demand is elastic, a decrease in price leads to an increase in total revenue.

Question 13

A perfectly price inelastic demand curve will be a ________ line.
A) horizontal
B) vertical
C) positively sloped
D) negatively sloped

Accepted Answer

A perfectly price inelastic demand curve is represented by a vertical line, indicating that the quantity demanded does not change regardless of the price level.

Question 14

A ________ line is a perfectly price elastic demand curve.
A) horizontal
B) vertical
C) positively sloped
D) negatively sloped

Accepted Answer

A horizontal line represents a perfectly price elastic demand curve, indicating that consumers are willing to buy any quantity at a specific price, but no quantity at a price even slightly higher.

Question 15

When the price of cheddar cheese increases 15%, quantity demanded decreases 15%. The price elasticity of demand for cheddar cheese is ________ and total revenue from cheddar cheese sales will ________.
A) elastic; decrease
B) elastic; increase
C) inelastic; decrease
D) unit elastic; not change

Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, both changes are 15%, making the elasticity equal to 1, which is defined as unit elastic. When demand is unit elastic, total revenue does not change with a price increase because the proportional decrease in quantity demanded exactly offsets the price increase.

Question 16

The ABC Computer Company wants to increase the quantity of computers it sells by 5%. If the price elasticity of demand is -2.5, the company must
A) increase price by 2.0%.
B) decrease price by 2.0%.
C) increase price by 0.5%.
D) decrease price by 0.5%.

Accepted Answer

The price elasticity of demand formula is % Change in Quantity Demanded / % Change in Price. To increase quantity sold by 5% with an elasticity of -2.5, the price must decrease by 2% (5% / -2.5 = -2%).

Question 17

When the price of oysters decreases 25%, quantity demanded is unchanged. The price elasticity of demand for oysters is
A) perfectly inelastic.
B) elastic.
C) inelastic.
D) unitary elastic.

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. If the quantity demanded is unchanged despite a price decrease, it means consumers' demand does not respond to price changes, indicating perfectly inelastic demand.

Question 18

The price elasticity of demand for heart transplants is perfectly inelastic. Thus, the price elasticity demand for heart transplants is
A) 1.0.
B) 0.0.
C) -1.0.
D) -100.0.

Accepted Answer

When demand is perfectly inelastic, the price elasticity of demand is 0.0, indicating that quantity demanded does not change regardless of price changes.

Question 19

When the price of fresh fish increases 10%, quantity demanded is unchanged. The price elasticity of demand for fresh fish is
A) perfectly inelastic.
B) elastic.
C) inelastic.
D) unitary elastic.

Accepted Answer

The price elasticity of demand measures how much the quantity demanded of a good responds to a change in its price. If the quantity demanded remains unchanged despite a price increase, it means consumers' demand does not respond to price changes, indicating perfectly inelastic demand.

Question 20

When the price of fresh fish increases 10%, quantity demanded decreases 5%. The price elasticity of demand for fresh fish is ________ and total revenue from fresh fish sales will ________.
A) inelastic; increase
B) inelastic; decrease
C) elastic; decrease
D) elastic; increase

Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price, which in this case is -5%/10% = -0.5, indicating inelastic demand (absolute value less than 1). When demand is inelastic, an increase in price leads to an increase in total revenue.

Quiz 5: Elasticity

Demand determines entirely when is perfectly inelastic.

Demand determines price entirely when

Refer to the information provided in Figure 5.1 below to answer the question(s) that follow. Figure 5.1 -Refer to Figure 5.1. The price elasticity of demand for tickets

When the price of oysters decreases 25%, quantity demanded increases 10%. The price elasticity of demand for oysters is and total revenue from oyster sales will .

A government wants to reduce electricity consumption by 10%. The price elasticity of demand for electricity is -5. The government must the price of electricity by .

When the price of coffee increases 5%, quantity demanded decreases 10%. The price elasticity of demand for coffee is and total revenue from coffee sales will .

Refer to the information provided in Figure 5.1 below to answer the question(s) that follow. Figure 5.1 -Refer to Figure 5.1. The demand for tickets is

A government wants to reduce electricity consumption by 5%. The price elasticity of demand for electricity is -0.5. The government must the price of electricity by .

A perfectly price elastic demand curve will be a ________ line.

The price elasticity of demand for kale in Texas is -2, and the price elasticity of demand for kale in California is -0.5. In other words, demand in Texas is , and demand in California is .

When the price of coffee decreases 5%, quantity demanded increases 5%. The price elasticity of demand for coffee is and total revenue from coffee sales will .

When the price of tea decreases 7%, quantity demanded increases 12%. The price elasticity of demand for tea is and total revenue from tea sales will .

A perfectly price inelastic demand curve will be a ________ line.

A ________ line is a perfectly price elastic demand curve.

When the price of cheddar cheese increases 15%, quantity demanded decreases 15%. The price elasticity of demand for cheddar cheese is and total revenue from cheddar cheese sales will .

The ABC Computer Company wants to increase the quantity of computers it sells by 5%. If the price elasticity of demand is -2.5, the company must

When the price of oysters decreases 25%, quantity demanded is unchanged. The price elasticity of demand for oysters is

The price elasticity of demand for heart transplants is perfectly inelastic. Thus, the price elasticity demand for heart transplants is

When the price of fresh fish increases 10%, quantity demanded is unchanged. The price elasticity of demand for fresh fish is

When the price of fresh fish increases 10%, quantity demanded decreases 5%. The price elasticity of demand for fresh fish is and total revenue from fresh fish sales will .