Question 1

The elasticity formula solves the units problem because percentages are unaffected by the units of measure.

Accepted Answer

The elasticity formula involves calculating percentage changes, which are unaffected by the units of measure. This makes it a useful tool for comparing the responsiveness of different variables, regardless of their units.

Question 2

The law of demand states that a lower price increases the amount of a commodity that people are willing to buy.

Accepted Answer

This is the basic principle of the law of demand - as the price of a commodity decreases, the quantity of that commodity demanded by consumers will increase, ceteris paribus.

Question 3

Perfectly inelastic demand curves are vertical.

Accepted Answer

A perfectly inelastic demand curve means that quantity demanded does not change regardless of changes in price, so the demand curve is perfectly vertical.

Question 4

Perfectly elastic demand curves are vertical.

Accepted Answer

Perfectly elastic demand curves are horizontal, indicating that consumers would buy an infinite amount of a good at one price but none at any higher price.

Question 5

Elasticity computations related to demand carry a minus sign to show that the demand curve is negatively sloped.

Accepted Answer

The answer of Elasticity computations related to demand carry a...

Question 6

If the price changes for a good for which the demand is perfectly inelastic, the response will be infinitely large.

Accepted Answer

If the demand for a good is perfectly inelastic, it means that consumers are not responsive to changes in price. Therefore, even if there is a change in price, the quantity demanded will remain the same. The response is not infinitely large, but rather zero.

Question 7

Price elasticity of demand can be written as percentage change in Q divided by percentage change in P.

Accepted Answer

This is the formula for calculating price elasticity of demand.

Question 8

Elasticity of demand is calculated by dividing the change in quantity by the change in the price of a good.

Accepted Answer

Elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.

Question 9

Computations of the price elasticity focus on the calculated magnitude due to of the law of demand.

Accepted Answer

The price elasticity of demand measures the responsiveness of the quantity demanded to a change in price. This is in accordance with the law of demand, which states that as the price of a good or service increases, the quantity demanded will decrease, and vice versa. Therefore, computations of the price elasticity do focus on the calculated magnitude due to the law of demand.

Question 10

Elasticity of demand is calculated using percentage changes in both price and quantity.

Accepted Answer

Elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.

Question 11

Elasticity of demand equals the ratio of the percentage change in the price of a good to the percentage change in the quantity demanded.

Accepted Answer

Elasticity of demand equals the ratio of the percentage change in the quantity demanded to the percentage change in the price of a good.

Question 12

The demand curve depicts quantities demanded that have been gathered as prices have changed over time.

Accepted Answer

The demand curve depicts the relationship between the price of a good and the quantity demanded at those prices, typically holding other factors constant, rather than showing quantities demanded as prices have changed over time.

Question 13

The sign of the elasticity computation is important because the value of the price elasticity can be negative or positive.

Accepted Answer

The answer of The sign of the elasticity computation is...

Question 14

Elasticity of demand equals the ratio of the percentage change in the quantity demanded to the percentage change in the price of the good.

Accepted Answer

This is the definition of price elasticity of demand.

Question 15

A line that is perfectly elastic has an elasticity of demand of zero.

Accepted Answer

A perfectly elastic demand means that the quantity demanded changes infinitely as the price changes. This means that even a slight change in price will result in a large change in quantity demanded. Therefore, the elasticity of demand for a perfectly elastic line is infinite, not zero.

Question 16

The market demand curve shows how the quantity demanded of a product, during a specified time period, changes as the price of that product changes.

Accepted Answer

The market demand curve is a graphical representation of the relationship between the price of a good or service and the quantity demanded by consumers. It shows the total demand for a product or service at each price point, based on the behavior of all consumers in the market.

Question 17

The quantity demanded in a market depends on many things, but the concept of elasticity focuses on the effect of changes in the price of the good.

Accepted Answer

Elasticity specifically measures the responsiveness of quantity demanded to changes in price. Other factors that can affect demand include income, preferences, and availability of substitutes, but these are not the focus of elasticity.

Question 18

Elasticity is a measure of the responsiveness of change in quantity demanded to a change in price.

Accepted Answer

Elasticity measures the degree to which quantity demanded responds to changes in price, making the statement true.

Question 19

The price elasticity of demand measure is generally stated as an absolute value.

Accepted Answer

The price elasticity of demand measure is generally stated as an absolute value because it is a measure of the responsiveness of quantity demanded to a change in price, regardless of the direction of the change.

Question 20

Price elasticity of demand is a numerical measure of how much quantity demanded rises as price falls or quantity demanded falls as price rises.

Accepted Answer

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Quiz 6: Demand and Elasticity