Question 1

Elasticity is:
A) a measure of changing market conditions brought on by a recession.
B) a measure of the sensitivity or responsiveness of one variable to another in response to price or income changes.
C) a function of price in an expanding economy.
D) a measure of sensitivity to demand in an expanding economy when income increases.

Accepted Answer

Elasticity is a concept in economics that measures the responsiveness of one variable to changes in another variable, typically the change in quantity demanded or supplied in response to changes in price or income. This definition aligns with option B, which accurately describes elasticity as a measure of sensitivity or responsiveness to price or income changes.

Question 2

A measure of the sensitivity or responsiveness of one variable to another is:
A) price.
B) demand.
C) supply.
D) elasticity.

Accepted Answer

Elasticity measures the responsiveness of one variable to changes in another variable, commonly used in economics to describe how the quantity demanded or supplied of a good responds to changes in price, income, or other goods' prices.

Question 3

_____ is an economic variable.
A) Price
B) Size
C) Color
D) Age

Accepted Answer

Price is an economic variable because it can change and affect economic decisions, unlike size, color, or age, which are not directly related to economic activities.

Question 4

The economic variable in the numerator of the elasticity of demand equation is:
A) size.
B) color.
C) quantity.
D) price.

Accepted Answer

The elasticity of demand equation measures how quantity demanded of a good responds to a change in price, thus the economic variable in the numerator is quantity.

Question 5

The economic variable in the numerator of the elasticity of demand equation is:
A) size.
B) color.
C) quantity.
D) price.

Accepted Answer

The elasticity of demand equation measures how quantity demanded responds to changes in price, so price is the economic variable in the numerator.

Question 6

What is being measured when the impact of an economic variable (such as price) on quantity is measured?
A) Elasticity
B) Demand
C) Supply
D) Price

Accepted Answer

Elasticity measures the responsiveness of one variable to changes in another variable, such as the impact of price changes on the quantity demanded or supplied.

Question 7

If the quantity demanded is not very responsive to a price change, then the demand curve would be:
A) unit elastic.
B) elastic.
C) inelastic.
D) vertical.

Accepted Answer

When the quantity demanded is not very responsive to a price change, the demand curve is described as inelastic. This means that even significant changes in price lead to relatively small changes in the quantity demanded.

Question 8

If the quantity demanded is very responsive to a price change, then the demand curve would be:
A) unit elastic.
B) elastic.
C) inelastic.
D) vertical.

Accepted Answer

When the quantity demanded is very responsive to a price change, the demand curve is considered elastic. This means that a small change in price leads to a large change in the quantity demanded.

Question 9

The demand for a luxury good such as a designer handbag tends to be:
A) unit elastic.
B) elastic.
C) inelastic.
D) vertical.

Accepted Answer

Luxury goods like designer handbags typically have elastic demand because consumers are more sensitive to price changes. When the price increases, demand decreases significantly, and vice versa, as these items are not necessities and consumers can easily forego purchasing them or switch to cheaper alternatives.

Question 10

Which of the following product pairs could best be considered substitute goods?
A) Peanut butter and jelly
B) Bagels and muffins
C) Hot dogs and buns
D) Steak and applesauce

Accepted Answer

Substitute goods are products that can replace each other in use or consumption. Bagels and muffins serve similar purposes (e.g., breakfast items, snacks) and can easily replace one another based on consumer preference, making them the best example of substitute goods among the options provided.

Question 11

The price elasticity of demand for a good is lower when:
A) there are few substitutes.
B) there are complement products.
C) there are a lot of substitutes.
D) the good is a luxury good.

Accepted Answer

The price elasticity of demand for a good is lower when there are few substitutes because consumers have fewer alternatives to switch to if the price of the good increases, making their demand less sensitive to price changes.

Question 12

The more _____ a product is defined, the more substitutes are likely to be available, and the more price _____ it will be.
A) narrowly; elastic
B) narrowly; inelastic
C) broadly; elastic
D) broadly; unit elastic

Accepted Answer

When a product is defined narrowly, it means it has very specific features or uses, making it easier for consumers to find alternative products that can serve the same purpose. This increases the number of substitutes available. Consequently, the demand for that product becomes more price elastic, meaning consumers are more sensitive to price changes and may switch to substitutes if the price increases.

Question 13

Generally, demand is more _____ in the _____ because consumers can fully adjust to price changes.
A) elastic; short run
B) elastic; long run
C) unit elastic; long run
D) inelastic; short run

Accepted Answer

Demand is generally more elastic in the long run because consumers have more time to adjust their consumption habits and explore alternatives in response to price changes.

Question 14

An example of a substitute good for steak is:
A) hamburger.
B) cereal.
C) cake.
D) jelly beans.

Accepted Answer

Hamburger is considered a substitute good for steak because both are beef products and can satisfy a similar need for a meat-based meal, making them interchangeable to some extent for consumers looking for a meat option.

Question 15

Which one of the following factors influences the price elasticity of demand?
A) the slope of the supply curve
B) the recession number of buyers
C) inflation
D) the time frame

Accepted Answer

The time frame influences the price elasticity of demand because consumers' ability to find substitutes or adjust their buying habits can vary over time.

Question 16

Which good is the most elastic because it represents a large share of a consumer's budget?
A) salt
B) napkins
C) cotton balls
D) televisions

Accepted Answer

Goods that represent a large share of a consumer's budget, like televisions, tend to have more elastic demand because consumers are more sensitive to price changes and may seek alternatives or forego the purchase altogether. Salt, napkins, and cotton balls typically represent a small share of the budget, making their demand less elastic.

Question 17

Demand for more expensive items tend to be more price _____ because they take up a large share of consumer budgets.
A) inelastic
B) unit elastic
C) zero elastic
D) elastic

Accepted Answer

Demand for more expensive items is more price elastic because when the price of such items changes, it significantly affects the consumer's decision to buy due to its large share of their budget.

Question 18

Consumers are less responsive to price increases when a good is a:
A) large share of their budget.
B) frequently advertised item.
C) necessity.
D) branded good.

Accepted Answer

Consumers are less responsive to price increases for necessities because these goods or services are essential for daily living, making their demand less elastic compared to non-essential goods.

Question 19

(Figure: The Market for Ford Mustangs) The price elasticity of demand for Ford Mustangs is:
 
A) .60
B) .67
C) 1.67
D) .40

Accepted Answer

The answer of (Figure: The Market for Ford Mustangs) The...

Question 20

To overcome ambiguity related to the direction of the price change, economists use what is known as the _____ method to estimate the percentages of changes when calculating elasticities.
A) integral
B) percentage
C) estimation
D) midpoint

Accepted Answer

The midpoint method is used by economists to calculate the percentage change in price and quantity when estimating elasticities, as it provides a consistent measure that does not depend on the direction of the change.

Quiz 4: Elasticity

Elasticity is:

A measure of the sensitivity or responsiveness of one variable to another is:

_____ is an economic variable.

The economic variable in the numerator of the elasticity of demand equation is:

The economic variable in the numerator of the elasticity of demand equation is:

What is being measured when the impact of an economic variable (such as price) on quantity is measured?

If the quantity demanded is not very responsive to a price change, then the demand curve would be:

If the quantity demanded is very responsive to a price change, then the demand curve would be:

The demand for a luxury good such as a designer handbag tends to be:

Which of the following product pairs could best be considered substitute goods?

The price elasticity of demand for a good is lower when:

The more _ a product is defined, the more substitutes are likely to be available, and the more price _ it will be.

Generally, demand is more _ in the _ because consumers can fully adjust to price changes.

An example of a substitute good for steak is:

Which one of the following factors influences the price elasticity of demand?

Which good is the most elastic because it represents a large share of a consumer's budget?

Demand for more expensive items tend to be more price _____ because they take up a large share of consumer budgets.

Consumers are less responsive to price increases when a good is a:

(Figure: The Market for Ford Mustangs) The price elasticity of demand for Ford Mustangs is:

To overcome ambiguity related to the direction of the price change, economists use what is known as the _____ method to estimate the percentages of changes when calculating elasticities.