Question 1

Economists use the concept of ________ to measure how one economic variable,such as quantity,responds to a change in another economic variable,such as price.

Accepted Answer

Elasticity measures the responsiveness of one variable to changes in another variable. It is commonly used to measure the responsiveness of quantity demanded to changes in price. When demand is elastic, a small change in price leads to a relatively large change in quantity demanded, while when demand is inelastic, a large change in price only leads to a small change in quantity demanded.

Question 2

To calculate the price elasticity of demand we divide

Accepted Answer

The correct formula for calculating price elasticity of demand is dividing the percentage change in quantity demanded by the percentage change in price. This formula helps to determine how responsive consumers are to changes in the price of a product or service.

Question 3

Facing stiff competition,Hendrix College,a small liberal arts institution in Conway,Ark.,decided two years ago to bolster its academic offerings,promising students at least three hands-on experiences outside the classroom,including research,internships and service projects.Although it raised tuition and fees by 29 percent,enrollment in the freshman class rose by 37 percent. Source: Jonathan D.Glater and Alan Finder,"In New Twist on Tuition Game,Popularity Rises With the Price," New York Times,December 12,2006
Based on the information above,the demand for Hendrix College education is

Accepted Answer

Despite raising tuition and fees by a significant 29 percent, enrollment in the freshman class still rose by an impressive 37 percent. This indicates that the demand for Hendrix College education is relatively inelastic, meaning that students are willing to pay a higher price for the unique and valuable educational experiences offered by the institution.

Question 4

Consider the following types of demand curves: 
a.a vertical demand curve
b.a horizontal demand curve
c.a linear downward-sloping demand curve
Which of the demand curves listed exhibits a price elasticity of demand coefficient that remains constant along the demand curve?

Accepted Answer

The answer of Consider the following types of demand curves:...

Question 5

If at a price of $50,Ghani sells 20 hand-made leather cell-phone covers but at a price of $60,zero units are sold.Based on this information,the demand for his cell-phone covers is

Accepted Answer

The answer of If at a price of $50,Ghani sells...

Question 6

Figure 6-4 
-Refer to Figure 6-4.The inelastic segment of the demand curve

Accepted Answer

The inelastic segment of the demand curve lies below the midpoint of the curve. This means that changes in price have a limited impact on the quantity demanded by consumers.

Question 7

Which of the following statements is true about the price elasticity of demand along a downward sloping linear demand curve?

Accepted Answer

Along a downward sloping linear demand curve, the price elasticity of demand is elastic at high prices because a small change in price will result in a large change in quantity demanded, and inelastic at low prices because a large change in price will result in a small change in quantity demanded. Therefore, the correct option is C.

Question 8

If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded,then the demand for golf balls is

Accepted Answer

A 35 percent increase in price resulted in a 42 percent decrease in quantity demanded, indicating that the demand is relatively elastic. This means that consumers are quite sensitive to changes in price and are willing to reduce their consumption significantly when prices increase.

Question 9

If the demand for a life-saving drug was perfectly inelastic and the price doubled,the quantity demanded would

Accepted Answer

When demand for a good is perfectly inelastic, it means that consumers are willing to pay any price for the product because it is a necessity and they cannot find a substitute for it. Therefore, a change in price will not affect the quantity demanded, and it will remain constant. Therefore, if the price of a life-saving drug doubled, the quantity demanded would remain the same as it is a life-saving drug and is a necessity for consumers.

Question 10

If,for a given percentage increase in price,quantity demanded falls by a proportionately smaller percentage,then demand is

Accepted Answer

When a percentage increase in price results in a proportionately smaller percentage decrease in quantity demanded, it indicates that demand is relatively inelastic. This means that consumers are not very responsive to changes in price, and will still buy the same amount even if the price rises.

Question 11

At a price of $8 per dozen,Chuy sells 40 dozen homemade tamales per week.When he raised her price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is

Accepted Answer

The demand is perfectly inelastic because the quantity demanded (40 dozen) did not change when the price increased from $8 to $12.

Question 12

In September 2012,the average price of gasoline in the United States was $3.91 per gallon,and consumers purchased nearly 5 percent less gasoline than they had during September 2011,when the average price of gasoline was $3.66 per gallon.Based on these figures,from September 2011 to September 2012,the demand for gasoline was

Accepted Answer

The decrease in quantity demanded (5%) is less than the increase in price (6.8%), indicating that demand is inelastic.

Question 13

If at a price of $24,Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids,the demand for her orchids is

Accepted Answer

The answer of If at a price of $24,Octavia sells...

Question 14

At a price of $100,Beachside Canoe Rentals rented 11 canoes.When it increased its rental price to $125,9 canoes were rented.Calculate the absolute value of the price elasticity of demand for canoe rentals,using the midpoint formula.

Accepted Answer

The answer of At a price of $100,Beachside Canoe Rentals...

Question 15

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 percent increase in the price of beef,holding every thing else constant,will cause the quantity of beef demanded to

Accepted Answer

The answer of The price elasticity of demand for beef...

Question 16

The slope of a demand curve is not used to measure the price elasticity of demand because

Accepted Answer

The measurement of slope is sensitive to the units chosen for price and quantity. Therefore, the slope cannot be used to measure the price elasticity of demand. Instead, the percentage change in quantity demanded divided by the percentage change in price is used to measure the price elasticity of demand.

Question 17

If the slope of a demand curve is equal to -0.1 then

Accepted Answer

The answer of If the slope of a demand curve...

Question 18

The price elasticity of demand is equal to

Accepted Answer

The answer of The price elasticity of demand is equal...

Question 19

Figure 6-4 
-Refer to Figure 6-4.At the midpoint of the demand curve,in absolute value

Accepted Answer

At the midpoint of the demand curve, the price elasticity coefficient (the absolute value of the percentage change in quantity demanded divided by the percentage change in price) is equal to one, which represents unit elasticity. This means that a change in price will result in an equal percentage change in quantity demanded. Therefore, choice D is correct.

Question 20

For consumers who opt to pay a $10 monthly fee to have unlimited texting on their cell phones,but choose not to pay a $5 monthly fee to have unlimited call minutes,the unlimited texting option has a ________ than the unlimited minutes option.

Accepted Answer

The answer of For consumers who opt to pay a...

Quiz 6: Elasticity: The Responsiveness of Demand and Supply