Question 1

-(Exhibit: Demand for Shirts)The price elasticity of demand for the segment DE is:

Accepted Answer

The answer of 
-(Exhibit: Demand for Shirts)The price elasticity of...

Question 2

Calculating percentage changes relative to the average value of each variable between two points is:

Accepted Answer

Arc elasticity measures the percentage change in one variable relative to the percentage change in another variable over a range of values, in this case, between two points. This is different from slope elasticity, which measures the percentage change in one variable relative to the percentage change in another variable at a single point. Median elasticity and differential elasticity are not commonly used terms in economics.

Question 3

-(Exhibit: Demand for Shirts)The price elasticity of demand for the segment AB is:

Accepted Answer

The answer of 
-(Exhibit: Demand for Shirts)The price elasticity of...

Question 4

-(Exhibit: Demand for Shirts)The price elasticity of demand for the segment FG is:

Accepted Answer

The answer of 
-(Exhibit: Demand for Shirts)The price elasticity of...

Question 5

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 190 bags to 210 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

Accepted Answer

The answer of If the price of chocolate-covered peanuts decreases...

Question 6

The concept of elasticity is most closely related to:

Accepted Answer

Elasticity refers to the responsiveness of the quantity demanded or supplied to changes in price. It is a measure of how much buyers or sellers adjust their behavior when prices change. This concept is most closely related to the law of demand, which states that as the price of a good or service increases, the quantity demanded decreases, ceteris paribus. Therefore, option A is the most appropriate choice.

Question 7

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of 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. Using the midpoint formula, we get:

Price elasticity of demand = [(220-180)/((220+180)/2)] / [(0.90-1.10)/((0.90+1.10)/2)]
                          = (40/200) / (-0.2/1)
                          = -1

Since the price elasticity of demand is greater than 1 in absolute value, we say that demand is elastic. This means that the percentage change in quantity demanded is greater than the percentage change in price. In other words, a decrease in price from $1.10 to $0.90 leads to a relatively larger increase in quantity demanded from 180 bags to 220 bags.

Question 8

-Suppose the demand curve has a slope equal to negative 1.The price elasticity of demand at any point on this demand curve is:

Accepted Answer

The answer of 
-Suppose the demand curve has a slope...

Question 9

The price elasticity of demand is calculated for:

Accepted Answer

Price elasticity of demand is typically calculated for small changes in price to measure how quantity demanded responds to these changes.

Question 10

If the price of chocolate-covered peanuts decreases from $1.05 to $0.95 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

Accepted Answer

Price Elasticity of Demand (PED) = Percentage change in quantity demanded / Percentage change in price

Here, the price has decreased by 10 cents, which is a 9.5% decrease from the initial price of $1.05.

The quantity demanded has increased from 180 bags to 220 bags, which is a 22.2% increase from the initial quantity demanded.

PED = (22.2 / 9.5) ≈ 2.33

Since the calculated PED is greater than 2 (in absolute value), the demand for chocolate-covered peanuts is elastic. This also means that a decrease in price leads to a more than proportionate increase in quantity demanded.

Question 11

-(Exhibit: Demand for Shirts)The price elasticity of demand for the segment BC is:

Accepted Answer

The answer of 
-(Exhibit: Demand for Shirts)The price elasticity of...

Question 12

The concept of elasticity is most closely related to:

Accepted Answer

Elasticity measures how much quantity demanded responds to a change in price, which is represented by a movement along the demand curve.

Question 13

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 0 bags to 400 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

Accepted Answer

The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. If the price decreases from $1.10 to $0.90 and the quantity demanded increases from 0 bags to 400 bags, this indicates a large increase in quantity demanded in response to a small change in price. Therefore, the price elasticity of demand is greater than 2 (absolute value). This is confirmed by the formula for price elasticity of demand:

% change in quantity demanded / % change in price

In this case, the % change in quantity demanded is:

[(400 - 0)/((400+0)/2)] x 100% = 100%

And the % change in price is:

[(0.90 - 1.10)/((0.90+1.10)/2)] x 100% = -18.18%

So the price elasticity of demand is:

100% / -18.18% = -5.5

Taking the absolute value, we get the price elasticity of demand is greater than 2.

Question 14

The price elasticity of a demand curve with a constant slope:

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. For a demand curve with a constant slope, the price elasticity of demand decreases in absolute value as one moves down the curve (i.e., as quantity demanded rises), because the percentage change in quantity demanded becomes smaller relative to the percentage change in price.

Question 15

-(Exhibit: Demand for Shirts)The price elasticity of demand for the segment CD is:

Accepted Answer

According to the exhibit, the demand curve for segment CD is relatively flat, indicating that a small change in price will result in a relatively large change in quantity demanded. This is characteristic of elastic demand, which is defined as having a price elasticity of demand greater than 1 (absolute value). Therefore, the correct answer is A.

Question 16

The price elasticity of a demand curve with a constant slope:

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. For a demand curve with a constant slope, the price elasticity of demand increases in absolute value as we move up the curve (i.e., as the price rises), because the percentage change in quantity demanded becomes larger relative to the percentage change in price.

Question 17

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded does not change, this indicates that, if other things are unchanged, the price elasticity of demand is:

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 does not change when the price changes, it indicates that the demand is perfectly inelastic, which is represented by an elasticity of 0.

Question 18

A shirt manufacturer sold 10 dozen shirts per day when the price was $4 per shirt but sold 15 dozen shirts per day when the price was $3 per shirt.Hence, the absolute value of the price elasticity of demand is:

Accepted Answer

The price elasticity of demand (PED) is calculated using the formula: PED = (% Change in Quantity Demanded) / (% Change in Price). Here, the quantity demanded changes from 10 dozen (120) shirts to 15 dozen (180) shirts, which is a 50% increase. The price changes from $4 to $3, which is a 25% decrease. Therefore, PED = 50% / 25% = 2, which is greater than 1 but less than 3.

Question 19

Price elasticity of demand is computed as the arc elasticity by:

Accepted Answer

Arc elasticity of demand is calculated by taking the percentage change in quantity demanded and dividing it by the percentage change in price, with both percentage changes calculated relative to the average values of quantity and price between two points.

Question 20

-(Exhibit: Demand for Shirts)The price elasticity of demand for the segment EF is:

Accepted Answer

The answer of 
-(Exhibit: Demand for Shirts)The price elasticity of...

Quiz 5: Macroeconomics: the Big Picture

-(Exhibit: Demand for Shirts) The price elasticity of demand for the segment DE is:

Calculating percentage changes relative to the average value of each variable between two points is:

-(Exhibit: Demand for Shirts) The price elasticity of demand for the segment AB is:

-(Exhibit: Demand for Shirts) The price elasticity of demand for the segment FG is:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 190 bags to 210 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

The concept of elasticity is most closely related to:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

-Suppose the demand curve has a slope equal to negative 1.The price elasticity of demand at any point on this demand curve is:

The price elasticity of demand is calculated for:

If the price of chocolate-covered peanuts decreases from $1.05 to $0.95 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

-(Exhibit: Demand for Shirts) The price elasticity of demand for the segment BC is:

The concept of elasticity is most closely related to:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 0 bags to 400 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

The price elasticity of a demand curve with a constant slope:

-(Exhibit: Demand for Shirts) The price elasticity of demand for the segment CD is:

The price elasticity of a demand curve with a constant slope:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded does not change, this indicates that, if other things are unchanged, the price elasticity of demand is:

A shirt manufacturer sold 10 dozen shirts per day when the price was $4 per shirt but sold 15 dozen shirts per day when the price was $3 per shirt.Hence, the absolute value of the price elasticity of demand is:

Price elasticity of demand is computed as the arc elasticity by:

-(Exhibit: Demand for Shirts) The price elasticity of demand for the segment EF is: