Question 1

Suppose that the price of product G increases from $10 to $20 and,in response,quantity demanded declines from 100 to 80.Using the midpoint formula,what is the elasticity of demand?
A).5
B)3
C).67
D).33
E)2

Accepted Answer

The answer of Suppose that the price of product G...

Question 2

The measurement for the price elasticity of demand is
A)unit free.
B)in percentage terms.
C)in dollar terms.
D)in terms of the quantity measurement of the good involved.
E)in terms of the currency used to purchase the good.

Accepted Answer

The price elasticity of demand is unit free because it measures the responsiveness of quantity demanded to a change in price, regardless of the units used to measure price and quantity. It is calculated as the percentage change in quantity demanded divided by the percentage change in price, resulting in a numerical value without a unit of measurement.

Question 3

The price elasticity of demand is expressed in dollar changes in price and quantity demanded.

Accepted Answer

The price elasticity of demand is expressed in percentage change in price and quantity demanded.

Question 4

The price elasticity of demand measures the change in quantity demanded given a dollar change in price.

Accepted Answer

The price elasticity of demand measures the percentage change in quantity demanded given a one percent change in price, not a dollar change.

Question 5

Which of the following correctly represents the midpoint formula?
A) 
B) 
C) 
D) 
E)

Accepted Answer

The answer of Which of the following correctly represents the...

Question 6

The price elasticity of demand is a more precise measure of the slope of a demand curve.

Accepted Answer

The price elasticity of demand is a measure of how responsive quantity demanded is to changes in price, while the slope of a demand curve only shows the relationship between price and quantity demanded at one specific point. The two measures are related, but they are not interchangeable.

Question 7

If 12 candy bars are demanded at $.30 each and 4 candy bars are demanded at $.50 each,what is the price elasticity of demand using the midpoint formula?
A)2
B).5
C)7.5
D).4
E)1.67

Accepted Answer

The midpoint formula for price elasticity of demand is:Ed = (% Change in Quantity Demanded) / (% Change in Price)In this case, the initial quantity demanded is 12 candy bars at $0.30 each, and the final quantity demanded is 4 candy bars at $0.50 each.The percentage change in quantity demanded is:(4 - 12) / 12 = -0.67The percentage change in price is:(0.50 - 0.30) / 0.30 = 0.67Therefore, the price elasticity of demand is:Ed = -0.67 / 0.67 = -1The absolute value of the price elasticity of demand is 1, which means that the demand for candy bars is elastic.

Question 8

If a $1 increase in price changes quantity demanded by 4 units,the price elasticity of demand
A)must equal .25 percent.
B)must equal 4 percent.
C)must equal 1/4.
D)cannot be calculated with this information.
E)must equal 4.

Accepted Answer

Price elasticity of demand requires both the percentage change in quantity demanded and the percentage change in price, not just the absolute changes.

Question 9

Suppose a $1 change in the price of a good results in the quantity demanded changing by .2 percent.Then you know
A)the price elasticity of demand is 1/5.
B)nothing about slope or price elasticity of demand based on this information.
C)the price elasticity of demand is 5.
D)the slope of the demand curve is 5.
E)the slope of the demand curve is 1/5.

Accepted Answer

The answer of Suppose a $1 change in the price...

Question 10

If a 1 percent change in price results in a 5 percent change in quantity demanded,then
A)the price elasticity of demand is 5.
B)the slope of the demand curve is 1/5.
C)the slope of the demand curve is 5.
D)the price elasticity of demand is 1/5.
E)there is not enough information to calculate slope or elasticity.

Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is 5% / 1% = 5.

Question 11

The price elasticity of demand measures how much price changes given a change in demand.

Accepted Answer

The price elasticity of demand measures the change in demand given a change in price, not the other way around.

Question 12

Consider two demand curves with different slopes.It is possible to predict ranges on each demand curve where the price elasticities of demand will be different.

Accepted Answer

The price elasticity of demand is influenced by the shape and slope of the demand curve. Demand curves that are steeper indicate a more inelastic demand, while demand curves with shallower slopes imply more elastic demand. Therefore, it is possible to predict ranges on each demand curve where the price elasticities of demand will be different.

Question 13

The price elasticity of demand is the same as the slope of the demand curve.

Accepted Answer

The price elasticity of demand is not the same as the slope of the demand curve. While both concepts are related and impact each other, the slope of the demand curve measures the change in quantity demanded over a change in price, while price elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Question 14

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

Accepted Answer

This is the correct definition of price elasticity of demand.

Question 15

The price elasticity of demand is negative because the demand curve slopes downward.

Accepted Answer

The price elasticity of demand is always negative because as price increases, the quantity demanded decreases, resulting in a downward sloping demand curve. However, when calculating the magnitude of the price elasticity of demand, the value is always positive due to the use of absolute values.

Question 16

If a 1 percent decrease in the price of steak results in a 2 percent increase in the quantity demanded for steak,then the price elasticity of the demand for steak is
A)2 cents.
B)2 pounds of steak.
C)2 percent.
D)$2.
E)2.

Accepted Answer

The price elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in its price. The formula for price elasticity of demand is:
Price elasticity = percentage change in quantity demanded / percentage change in price
Given that a 1% decrease in price leads to a 2% increase in quantity demanded:
Percentage change in quantity demanded = 2%
Percentage change in price = -1%
Substituting these values in the formula:
Price elasticity = 2% / (-1%) = -2
Note that price elasticity is usually expressed as an absolute value, so the answer is 2.

Question 17

If the price elasticity of demand is equal to 4,a 1 percent increase in the price will cause quantity demanded to increase from 100 to 104 units.

Accepted Answer

If the price elasticity of demand is 4, a 1 percent increase in price would lead to a 4 percent decrease in quantity demanded according to the formula: %ΔQd = E(%ΔP), where E is the price elasticity of demand. Therefore, the quantity demanded would decrease from 100 to 96 units, not increase to 104 units.

Question 18

The measurement of the price elasticity of demand is unit free.

Accepted Answer

Price elasticity of demand is expressed as a percentage change in quantity demanded with respect to a percentage change in price. Since the unit of measurement cancels out in this calculation, the price elasticity of demand is unit free.

Question 19

Which of the following statements about the price elasticity of demand is true?
A)Slope and elasticity measure the same things.
B)Price elasticity of demand varies depending on how price and quantity are measured.
C)It is important to know whether the price elasticity of demand is a positive or negative number.
D)The slope of a demand curve does not tell us the price elasticity of demand.
E)Price elasticity is the same everywhere along a demand curve of any shape.

Accepted Answer

The slope of a demand curve tells us the rate at which quantity demanded changes with a change in price, but it does not tell us the exact percentage change in quantity demanded with a change in price. That is determined by the price elasticity of demand, which is calculated using the percentage change in quantity demanded and the percentage change in price. The two concepts are related, but not equivalent.

Question 20

Suppose that,as the price of product H falls from $5 to $4,the quantity of H demanded increases from 2,000 to 6,000 units.In this case,what is the elasticity of demand,using the midpoint formula?
A).9
B).4
C)4.5
D)1.6
E)3.0

Accepted Answer

Using the midpoint formula, the price elasticity of demand can be calculated as:

Elasticity = ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2))

Plugging in the values, we get:

Elasticity = ((6000 - 2000) / ((6000 + 2000) / 2)) / (($4 - $5) / (($4 + $5) / 2))
Elasticity = 4.5

Therefore, the elasticity of demand is 4.5. The closest option is C) 4.5.

Quiz 4: Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

Suppose that the price of product G increases from $10 to $20 and,in response,quantity demanded declines from 100 to 80.Using the midpoint formula,what is the elasticity of demand?

The measurement for the price elasticity of demand is

The price elasticity of demand is expressed in dollar changes in price and quantity demanded.

The price elasticity of demand measures the change in quantity demanded given a dollar change in price.

Which of the following correctly represents the midpoint formula?

The price elasticity of demand is a more precise measure of the slope of a demand curve.

If 12 candy bars are demanded at $.30 each and 4 candy bars are demanded at $.50 each,what is the price elasticity of demand using the midpoint formula?

If a $1 increase in price changes quantity demanded by 4 units,the price elasticity of demand

Suppose a $1 change in the price of a good results in the quantity demanded changing by .2 percent.Then you know

If a 1 percent change in price results in a 5 percent change in quantity demanded,then