Question 1

The percentage change in quantity demanded that results from a 1 percent change in price is known as the:
A)price elasticity of supply.
B)price elasticity of demand.
C)income elasticity of demand.
D)cross-price elasticity of demand.

Accepted Answer

The percentage change in quantity demanded resulting from a 1 percent change in price is the definition of price elasticity of demand. Therefore, the correct answer is B. Price elasticity of supply (A) is the percentage change in quantity supplied resulting from a 1 percent change in price, while income elasticity of demand (C) is the percentage change in quantity demanded resulting from a 1 percent change in income. Cross-price elasticity of demand (D) is the percentage change in quantity demanded of one good resulting from a 1 percent change in the price of another good. None of these definitions match the given scenario, so the correct answer is B.

Question 2

If the price elasticity of demand for pineapples is 0.75, then a 4% increase in the price of pineapples will lead to a:
A)3% decrease in the quantity of pineapples demanded.
B)3% increase in the quantity of pineapples demanded.
C)0.75% decrease in the quantity of pineapples demanded.
D)0.75% increase in the quantity of pineapples demanded.

Accepted Answer

If the price elasticity of demand for pineapples is 0.75, a 4% increase in the price of pineapples will result in a relatively smaller decrease in the quantity of pineapples demanded. The formula for calculating the percentage change in quantity demanded is:

% Change in Quantity Demanded = Price Elasticity of Demand x % Change in Price
% Change in Quantity Demanded = 0.75 x 4%
% Change in Quantity Demanded = 3%

Therefore, a 4% increase in the price of pineapples will lead to a 3% decrease in the quantity of pineapples demanded.

Question 3

The price elasticity of demand for a good measures the responsiveness of:
A)demand to a one percent change in price of that good.
B)price to a one percent change in the demand for that good.
C)quantity demanded to a one percent change in price of that good.
D)price to a one percent change in the quantity demanded of that good.

Accepted Answer

The price elasticity of demand measures the percentage change in quantity demanded in response to a one percent change in price of that good. Therefore, the correct choice is C, which states that the price elasticity of demand measures the responsiveness of quantity demanded to a one percent change in price of that good.

Question 4

When calculating price elasticity of demand, if the percentage change in price is negative, then the percentage change in quantity demanded is typically:
A)greater than one.
B)positive.
C)less than one.
D)negative.

Accepted Answer

If the percentage change in price is negative (that is, if price falls), then the percentage change in quantity demanded will be positive, since price and quantity demanded move in opposite directions.

Question 5

If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then the price elasticity of demand is equal to:
A)0.05.
B)0.5.
C)2.
D)5.

Accepted Answer

The price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price, here -0.5/1 = -0.5. By convention, the price elasticity of demand is expressed in terms of its absolute value.

Question 6

The demand for a good is unit elastic with respect to price if the price elasticity of demand is:
A)equal to one.
B)greater than one.
C)less than one.
D)greater than negative one.

Accepted Answer

Unit elasticity means that the percentage change in quantity demanded is equal to the percentage change in price. This can only happen if the price elasticity of demand is exactly one.

Question 7

The demand for a good is elastic if the price elasticity of demand is:
A)equal to one.
B)greater than one.
C)less than one.
D)equal to zero.

Accepted Answer

The demand for a good is elastic if the price elasticity of demand is greater than one. This means that a small change in price will lead to a relatively larger change in the quantity demanded. In other words, consumers are very responsive to changes in price, and will reduce their purchases significantly if the price increases even slightly. This can result in a decrease in total revenue for the seller, as the increase in price is not enough to offset the decrease in quantity demanded.

Question 8

If the absolute value of the price elasticity of demand for tickets to a football game is 2, then if the price increases by 1%, quantity demanded decreases by:
A)½%.
B)1%.
C)2%.
D)4%.

Accepted Answer

The price elasticity of demand is 2, meaning that for every 1% increase in price, the quantity demanded decreases by 2%.

Question 9

If the absolute value of the price elasticity of demand for cell phone service is 3, then if the price of cell phone service increases by 1%, quantity demanded would:
A)increase by 0.33%.
B)decrease by 0.33%.
C)increase by 3%.
D)decrease by 3%.

Accepted Answer

A price elasticity of demand of 3 implies that for each 1% increase in price, quantity demanded will decrease by 3%. Therefore, if the price of cell phone service increases by 1%, quantity demanded would decrease by 3%.

Question 10

If the price elasticity of demand for a good equals one, then the demand for that good is:
A)elastic.
B)inelastic.
C)unit elastic.
D)perfectly elastic.

Accepted Answer

A price elasticity of demand equal to one means that the percentage change in quantity demanded is equal to the percentage change in price. This indicates that demand is neither highly responsive (elastic) nor unresponsive (inelastic) to changes in price. Therefore, the demand for that good is said to be unit elastic.

Question 11

The demand for a good is inelastic with respect to price if the price elasticity of demand is:
A)equal to one.
B)greater than one.
C)less than one.
D)equal to negative one.

Accepted Answer

If the price elasticity of demand is less than one, it means that a change in price will lead to a proportionally smaller change in quantity demanded. This indicates that demand for the good is inelastic.

Question 12

If 20% increase in the price of a good leads to a 60% decrease in the quantity demanded, then what is the price elasticity of demand?
A)30.
B)3.
C)1/3.
D)1/6.

Accepted Answer

Price elasticity of demand can be calculated using the following formula:
% change in quantity demanded / % change in price
Here, we are given that there is a 20% increase in price which leads to a 60% decrease in quantity demanded. 
Substituting the values in the formula, we get:
-60% / 20% = -3
Since elasticity values are usually positive, we take the absolute value of the result which gives us 3. Therefore, the price elasticity of demand is 3.

Question 13

If the price of cheese falls by 1 percent and the quantity demanded rises by 3 percent, then the price elasticity of demand for cheese is equal to:
A)30.
B)0.30.
C)0.333.
D)3.

Accepted Answer

The price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price, here +3/-1 = -3. By convention, the price elasticity of demand is expressed in terms of its absolute value.

Question 14

If the price elasticity of demand for a good is greater than one, then the demand for that good is:
A)elastic.
B)inelastic.
C)unit elastic.
D)perfectly elastic.

Accepted Answer

If the price elasticity of demand is greater than one, it means that a small change in price will cause a larger change in the quantity demanded. This indicates that the demand is elastic, as consumers are highly responsive to changes in price.

Question 15

The price elasticity of demand is a measure of:
A)the change in quantity demanded of a good that results from a change in its price.
B)the change in price of a good that results from a change in its quantity demanded.
C)the demand for a good.
D)how consumers respond to excess demand.

Accepted Answer

Price elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. A high price elasticity of demand means that a small change in price leads to a large change in quantity demanded, indicating that the good is very sensitive to price changes. A low price elasticity of demand means that a change in price has little effect on the quantity demanded, indicating that the good is relatively insensitive to price changes.

Question 16

If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then demand for textbooks is:
A)negative.
B)inelastic.
C)elastic.
D)unit elastic.

Accepted Answer

If the percentage change in quantity is less than the percentage change in price, then the price elasticity of demand will be less than one in absolute value, implying that demand is inelastic.

Question 17

If a 10% decrease in the price of a good leads to a 20% increase in the quantity demanded, then what is the price elasticity of demand?
A)½.
B)2.
C)10.
D)20.

Accepted Answer

Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.

Here, we are given that a 10% decrease in price leads to a 20% increase in quantity demanded.

So, percentage change in quantity demanded = 20%  
and percentage change in price = 10%

Therefore, price elasticity of demand = (20%/10%) = 2

Hence, the answer is (B) 2.

Question 18

If the price elasticity of demand for chicken is 2, then a 20% decrease in the price of chicken will lead to a:
A)10% decrease in the quantity demanded of chicken.
B)10% increase in the quantity demanded of chicken.
C)40% decrease in the quantity demanded of chicken.
D)40% increase in the quantity demanded of chicken.

Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. With an elasticity of 2, a 20% decrease in price will lead to a 40% increase in quantity demanded (20% * 2 = 40%).

Question 19

The price elasticity of demand is typically expressed as a positive number because:
A)price and quantity move in the same direction.
B)the demand curve has a positive slope.
C)it's convenient to use absolute values.
D)both the numerator and the denominator are negative, so the formula yields a positive number.

Accepted Answer

Although price and quantity vary negatively, by convention the price elasticity of demand is expressed in terms of its absolute value.

Question 20

If the price elasticity of demand for cigarettes is 0.55, and the price of cigarettes increases by 10 percent, then the quantity of cigarettes demanded will fall by:
A)0.55 percent.
B)5.5 percent.
C)55 percent.
D)550 percent.

Accepted Answer

The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. In this case, a 10 percent increase in price would lead to a 5.5 percent decrease in quantity demanded (0.55 * 10 = 5.5). Therefore, the correct answer is B.

Quiz 4: Elasticity

The percentage change in quantity demanded that results from a 1 percent change in price is known as the:

If the price elasticity of demand for pineapples is 0.75, then a 4% increase in the price of pineapples will lead to a:

The price elasticity of demand for a good measures the responsiveness of:

When calculating price elasticity of demand, if the percentage change in price is negative, then the percentage change in quantity demanded is typically:

If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then the price elasticity of demand is equal to:

The demand for a good is unit elastic with respect to price if the price elasticity of demand is:

The demand for a good is elastic if the price elasticity of demand is:

If the absolute value of the price elasticity of demand for tickets to a football game is 2, then if the price increases by 1%, quantity demanded decreases by:

If the absolute value of the price elasticity of demand for cell phone service is 3, then if the price of cell phone service increases by 1%, quantity demanded would:

If the price elasticity of demand for a good equals one, then the demand for that good is:

The demand for a good is inelastic with respect to price if the price elasticity of demand is:

If 20% increase in the price of a good leads to a 60% decrease in the quantity demanded, then what is the price elasticity of demand?

If the price of cheese falls by 1 percent and the quantity demanded rises by 3 percent, then the price elasticity of demand for cheese is equal to:

If the price elasticity of demand for a good is greater than one, then the demand for that good is:

The price elasticity of demand is a measure of:

If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then demand for textbooks is:

If a 10% decrease in the price of a good leads to a 20% increase in the quantity demanded, then what is the price elasticity of demand?

If the price elasticity of demand for chicken is 2, then a 20% decrease in the price of chicken will lead to a:

The price elasticity of demand is typically expressed as a positive number because:

If the price elasticity of demand for cigarettes is 0.55, and the price of cigarettes increases by 10 percent, then the quantity of cigarettes demanded will fall by: