Question 1

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 2

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 measures the responsiveness of quantity demanded to changes in price, making it a key factor in determining how changes in price will affect demand in a market.

Question 3

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

Accepted Answer

Elasticity measures how much the quantity demanded changes in response to changes in price.

Question 4

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 product and the quantity demanded of that product by all consumers in a market during a given time period. It shows the inverse relationship between price and quantity demanded.

Question 5

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

Accepted Answer

A perfectly elastic demand refers to a situation where a small change in price leads to an infinite change in quantity demanded. Therefore, the elasticity of demand is infinite for a perfectly elastic demand, not zero.

Question 6

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

Accepted Answer

This is the definition of price elasticity of demand.

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 correct formula for calculating price elasticity of demand.

Question 8

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.

Question 9

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 10

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 good decreases, the quantity demanded of that good increases, and vice versa.

Question 11

A horizontal demand curve is perfectly elastic because a change in price will induce an infinite change in quantity demanded.

Accepted Answer

A horizontal demand curve means that consumers are extremely responsive to changes in price, meaning that even a small change in price will result in a significant change in the quantity demanded. At the extreme of perfect elasticity, even the slightest change in price will lead to an infinite change in quantity demanded, hence the demand curve is perfectly elastic.

Question 12

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

Accepted Answer

True, because elasticity is a ratio of percentage changes, which cancels out the units of measure.

Question 13

A horizontal demand curve is perfectly elastic because a change in price will not induce a change in quantity demanded.

Accepted Answer

A horizontal demand curve is perfectly elastic because even a tiny change in price will lead to an infinite change in quantity demanded, not because changes in price do not affect quantity demanded.

Question 14

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 15

A straight-line demand curve has the same elasticity throughout its length.

Accepted Answer

The elasticity of a straight-line demand curve varies along its length, being elastic in the upper half, unit elastic at the midpoint, and inelastic in the lower half.

Question 16

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

Accepted Answer

Elasticity of demand is a measure of the responsiveness of quantity demanded to changes in price. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price. Therefore, it is calculated using percentage changes in both price and quantity.

Question 17

A vertical demand curve has an elasticity of demand equal to zero.

Accepted Answer

A vertical demand curve indicates that consumers are willing to buy a certain quantity of a good or service regardless of the price. Therefore, a change in price will not affect the quantity demanded, resulting in an elasticity of demand equal to zero.

Question 18

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 19

Perfectly inelastic demand curves are vertical.

Accepted Answer

Perfectly inelastic demand means that the quantity demanded remains constant regardless of changes in price. This results in a vertical demand curve, as the price can change but the quantity demanded remains the same.

Question 20

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

Accepted Answer

The price elasticity of demand measure is always stated as a positive value or absolute value, regardless of whether the demand is elastic or inelastic.

Quiz 6: Demand and Elasticity