Question 1

The demand for gasoline will be most elastic

Accepted Answer

The demand for gasoline becomes more elastic over time as consumers have more time to adjust their consumption habits, find alternatives, or make other changes in response to price changes. After a year, consumers are more likely to have adapted to the price change, making the demand more elastic compared to shorter time frames.

Question 2

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

Accepted Answer

A perfectly elastic demand curve means that any increase in price will cause consumers to completely stop purchasing the product, resulting in an infinite responsiveness to price changes. Therefore, the price elasticity of demand coefficient would equal infinity.

Question 3

Exhibit 5-7 Demand curve for concert tickets
​

In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will:

Accepted Answer

The answer of Exhibit 5-7 Demand curve for concert tickets
​

In...

Question 4

Other things constant, the price elasticity of demand for a product will be smaller (more inelastic) if:

Accepted Answer

The price elasticity of demand tends to be smaller (more inelastic) for products that represent an insignificant share of consumers' income because consumers are less sensitive to price changes when the amount they spend on a product is relatively small.

Question 5

Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and 1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:

Accepted Answer

The answer of Suppose the quantity demanded is 1,000 million...

Question 6

What happens to total revenue if price increases and demand is inelastic? Why?

Accepted Answer

The answer of What happens to total revenue if price...

Question 7

Exhibit 5-7 Demand curve for concert tickets
​

According to Exhibit 5-7, the demand for concert tickets between the prices of $10 and $40 is:

Accepted Answer

The answer of Exhibit 5-7 Demand curve for concert tickets
​

According...

Question 8

Exhibit 5-6 Demand curve for concert tickets
​

In Exhibit 5-6, if promoters lower their ticket price from $30 to $20, then:

Accepted Answer

The demand curve shows that at a price of $30, the quantity demanded is 2,000 tickets, and at a price of $20, the quantity demanded increases to 3,000 tickets. This suggests that the demand is elastic between $30 and $20, meaning that a decrease in price will result in an increase in total revenue. Therefore, if promoters lower their ticket price from $30 to $20, both ticket sales and total revenue will increase.

Question 9

The demand for a product is likely to be more elastic:

Accepted Answer

When more good substitutes for the product are available, consumers have more options to choose from, making them more sensitive to changes in price. This means that the demand for the product is more elastic.

Question 10

Suppose a good has a downward-sloping, straight-line demand curve. If the price elasticity of demand is 2.5 when the price is $10 per unit, then the price elasticity of demand when the price is $7 per unit could be

Accepted Answer

As price decreases along a linear demand curve, the price elasticity of demand decreases. Therefore, at a lower price of $7, the elasticity would be less than 2.5, making 1.7 a plausible value.

Question 11

On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:

Accepted Answer

When the price elasticity of demand is less than 1, a decrease in price will lead to a smaller percentage increase in the quantity demanded. As a result, the decrease in price will lead to a decrease in total revenue, as the decrease in price is not enough to offset the decrease in quantity demanded.

Question 12

The elastic portion of the downward-sloping straight-line demand curve lies:

Accepted Answer

The elastic portion of the demand curve is the top portion or the flatter portion of the curve. This means that a change in price will cause a large change in quantity demanded, indicating elasticity. In this portion, the price elasticity of demand is greater than 1, meaning that the percentage change in quantity demanded is greater than the percentage change in price. The point of unit elasticity (where the elasticity is equal to 1) is located where the curve begins to become steeper. Therefore, the elastic portion lies above the point of unit elasticity, making choice B the correct answer.

Question 13

If the quantity of bananas sold increases by 5 percent when the price decreases by 10 percent, the price change occurs in the

Accepted Answer

The price elasticity of demand is less than 1 (inelastic) because the percentage change in quantity demanded (5%) is less than the percentage change in price (10%). This suggests the price change occurs in the bottom half of the demand curve. Since the price decrease leads to a smaller proportional increase in quantity sold, total revenue decreases.

Question 14

Exhibit 5-5 Demand curve for computers
​

In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is:

Accepted Answer

The change in total revenue resulting from a change in price from A to D indicates that the demand curve is elastic. This is because the change in price leads to a more than proportional change in quantity demanded, resulting in a decrease in total revenue. In other words, consumers are sensitive to changes in price and will reduce their demand significantly in response to a price increase, leading to a greater decrease in revenue than the increase in price.

Question 15

Exhibit 5-5 Demand curve for computers
​

In Exhibit 5-5, the total revenue at point B on the demand curve equals:

Accepted Answer

The answer of Exhibit 5-5 Demand curve for computers
​

In Exhibit...

Question 16

The demand for a product is likely to be more elastic

Accepted Answer

The demand for a product is more elastic when consumers can more easily do without it, meaning it is less essential. Essential goods have more inelastic demand because consumers will buy them regardless of price changes.

Question 17

If a supplier faces a perfectly horizontal demand curve and sets his price slightly higher than the demand curve itself, he can expect:

Accepted Answer

A perfectly horizontal demand curve indicates perfect elasticity, meaning consumers are extremely sensitive to price changes. If the supplier raises the price even slightly above the market price, consumers will stop buying the product altogether, leading to a complete loss of revenues.

Question 18

Exhibit 5-6 Demand curve for concert tickets
​

In Exhibit 5-6, the demand curve for concert tickets shown above between the prices of $20 and $30 is

Accepted Answer

The demand curve for concert tickets shown between the prices of $20 and $30 is relatively flat, indicating that a small change in price will result in a larger change in quantity demanded. This shows that the demand is elastic.

Question 19

If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, this market is operating in which section of its downward-sloping straight-line demand curve?

Accepted Answer

The market is operating in the section above the point of unit elasticity because the percentage decrease in quantity demanded (10%) is greater than the percentage increase in price (5%), indicating that the demand is elastic in this section of the curve.

Question 20

Exhibit 5-5 Demand curve for computers
​

In Exhibit 5-5, the total revenue at point E on the demand curve equals:

Accepted Answer

The answer of Exhibit 5-5 Demand curve for computers
​

In Exhibit...

Quiz 5: Price Elasticity of Demand and Supply

The demand for gasoline will be most elastic

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

Exhibit 5-7 Demand curve for concert tickets In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will:

Other things constant, the price elasticity of demand for a product will be smaller (more inelastic) if:

Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and 1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:

What happens to total revenue if price increases and demand is inelastic? Why?

Exhibit 5-7 Demand curve for concert tickets According to Exhibit 5-7, the demand for concert tickets between the prices of $10 and $40 is:

Exhibit 5-6 Demand curve for concert tickets In Exhibit 5-6, if promoters lower their ticket price from $30 to $20, then:

The demand for a product is likely to be more elastic:

Suppose a good has a downward-sloping, straight-line demand curve. If the price elasticity of demand is 2.5 when the price is $10 per unit, then the price elasticity of demand when the price is $7 per unit could be

On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:

The elastic portion of the downward-sloping straight-line demand curve lies:

If the quantity of bananas sold increases by 5 percent when the price decreases by 10 percent, the price change occurs in the

Exhibit 5-5 Demand curve for computers In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is:

Exhibit 5-5 Demand curve for computers In Exhibit 5-5, the total revenue at point B on the demand curve equals:

The demand for a product is likely to be more elastic

If a supplier faces a perfectly horizontal demand curve and sets his price slightly higher than the demand curve itself, he can expect:

Exhibit 5-6 Demand curve for concert tickets In Exhibit 5-6, the demand curve for concert tickets shown above between the prices of $20 and $30 is

If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, this market is operating in which section of its downward-sloping straight-line demand curve?

Exhibit 5-5 Demand curve for computers In Exhibit 5-5, the total revenue at point E on the demand curve equals:

Quiz 5: Price Elasticity of Demand and Supply

The demand for gasoline will be most elastic

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

Exhibit 5-7 Demand curve for concert tickets ​ In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will:

Other things constant, the price elasticity of demand for a product will be smaller (more inelastic) if:

Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and 1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:

What happens to total revenue if price increases and demand is inelastic? Why?

Exhibit 5-7 Demand curve for concert tickets ​ According to Exhibit 5-7, the demand for concert tickets between the prices of $10 and $40 is:

Exhibit 5-6 Demand curve for concert tickets ​ In Exhibit 5-6, if promoters lower their ticket price from $30 to $20, then:

The demand for a product is likely to be more elastic:

Suppose a good has a downward-sloping, straight-line demand curve. If the price elasticity of demand is 2.5 when the price is $10 per unit, then the price elasticity of demand when the price is $7 per unit could be

On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:

The elastic portion of the downward-sloping straight-line demand curve lies:

If the quantity of bananas sold increases by 5 percent when the price decreases by 10 percent, the price change occurs in the

Exhibit 5-5 Demand curve for computers ​ In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is:

Exhibit 5-5 Demand curve for computers ​ In Exhibit 5-5, the total revenue at point B on the demand curve equals:

The demand for a product is likely to be more elastic

If a supplier faces a perfectly horizontal demand curve and sets his price slightly higher than the demand curve itself, he can expect:

Exhibit 5-6 Demand curve for concert tickets ​ In Exhibit 5-6, the demand curve for concert tickets shown above between the prices of $20 and $30 is

If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, this market is operating in which section of its downward-sloping straight-line demand curve?

Exhibit 5-5 Demand curve for computers ​ In Exhibit 5-5, the total revenue at point E on the demand curve equals:

Exhibit 5-7 Demand curve for concert tickets In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will:

Exhibit 5-7 Demand curve for concert tickets According to Exhibit 5-7, the demand for concert tickets between the prices of $10 and $40 is:

Exhibit 5-6 Demand curve for concert tickets In Exhibit 5-6, if promoters lower their ticket price from $30 to $20, then:

Exhibit 5-5 Demand curve for computers In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is:

Exhibit 5-5 Demand curve for computers In Exhibit 5-5, the total revenue at point B on the demand curve equals:

Exhibit 5-6 Demand curve for concert tickets In Exhibit 5-6, the demand curve for concert tickets shown above between the prices of $20 and $30 is

Exhibit 5-5 Demand curve for computers In Exhibit 5-5, the total revenue at point E on the demand curve equals: