Question 1

The less responsive consumers are to a change in the price of a product:
A)the more price-elastic is the supply curve.
B)the more income-elastic is the demand curve.
C)the more price-inelastic is the demand curve.
D)the more income-elastic is the supply curve.
E)the more price-elastic is the demand curve.

Accepted Answer

The less responsive consumers are to a change in the price of a product, the more price-inelastic is the demand curve. This means that even small changes in price will not significantly affect the quantity demanded of the product.

Question 2

What would be the consequences of a 10 percent decrease in the price of a good for which price elasticity of demand is 5?
A)A 50 percent decrease in quantity demanded
B)A 5 percent increase in quantity demanded
C)A 50 percent increase in quantity demanded
D)A decrease in quantity demanded by 0.2
E)An increase in quantity demanded by 0.2

Accepted Answer

The formula for calculating the percentage change in quantity demanded is:
%ΔQ = (Elasticity of demand) x (%ΔP)
Substituting the given values, we get:
%ΔQ = 5 x (-10) = -50%
Since the elasticity of demand is greater than 1 in absolute value, the percentage change in quantity demanded is greater than the percentage change in price. Therefore, a 10 percent decrease in the price of a good for which the price elasticity of demand is 5 will result in a 50 percent increase in quantity demanded.

Question 3

If demand is perfectly inelastic, then:
A)the elasticity of demand is 1.
B)the elasticity of demand is -1.
C)the demand curve will be nonexistent.
D)the demand curve will be a horizontal line.
E)quantity demanded does not change when price changes.

Accepted Answer

E

Question 4

If the percentage change in quantity demanded of a good is greater than the percentage change in price that caused it, then demand for the good is _____.
A)inelastic
B)relatively elastic
C)unit-elastic
D)perfectly inelastic
E)perfectly elastic

Accepted Answer

When the percentage change in quantity demanded of a good is greater than the percentage change in price that caused it, the demand for the good is said to be relatively elastic. This means that consumers are quite sensitive to changes in price and are likely to reduce their demand significantly if the price goes up.

Question 5

Suppose 50 loaves of bread are demanded at a particular price.If that price rises by 2 percent, the quantity demanded decreases to 49.5 loaves of bread.This implies:
A)demand is elastic.
B)demand is unit-elastic.
C)the price elasticity of demand is equal to 2.
D)demand is inelastic.
E)consumers are very responsive to a price change.

Accepted Answer

A decrease in quantity demanded by only 0.5 loaves (or 1% of the original quantity) in response to a 2% price increase indicates that demand is not very sensitive to price changes. Therefore, demand is inelastic.

Question 6

If a price increase from $20 to $40 causes quantity demanded to decrease from 100 units to 50 units, one can conclude that demand for the product is _____.
A)inelastic
B)elastic
C)perfectly inelastic
D)infinitely elastic
E)unit-elastic

Accepted Answer

The answer of If a price increase from $20 to...

Question 7

Which of the following is an example of inelastic demand?
A)A 10 percent increase in the price of milk leads to a 20 percent decrease in the quantity demanded of milk.
B)A 10 percent increase in the price of milk leads to a 10 percent decrease in the quantity demanded of milk.
C)A 10 percent increase in the price of milk leads to a 5 percent decrease in the quantity demanded of milk.
D)A 10 percent increase in the price of milk leads to no change in the quantity demanded of milk.
E)A 10 percent increase in the price of milk leads to a 5 percent increase in the quantity demanded of milk.

Accepted Answer

The answer of Which of the following is an example...

Question 8

Assume that the demand curve for a certain good is a vertical line.This vertical demand curve illustrates the idea that:
A)consumers are unwilling to pay more than a certain price for the good.
B)the good is a complement to another good.
C)consumers are unwilling to pay less than a certain price for the good.
D)there are many substitutes for this good.
E)people will not change the quantity of the good when the price of the good is changed.

Accepted Answer

The answer of Assume that the demand curve for a...

Question 9

Which of the following is explained by the price elasticity of demand?
A)The effect of price changes on supply.
B)The effect of quantity changes on supply.
C)The effect of quantity changes on price.
D)The effect of price changes on quantity demanded.
E)The effect of price changes on quantity supplied.

Accepted Answer

The price elasticity of demand measures the sensitivity of quantity demanded to changes in the price of a good or service. Therefore, the effect of price changes on quantity demanded is explained by the price elasticity of demand.

Question 10

If a product has an elastic demand, this means that:
A)consumers are relatively sensitive to a change in the price of the product.
B)consumers are relatively insensitive to a change in the quantity demanded.
C)consumers are relatively insensitive to a change in the price of the product.
D)producers are relatively insensitive to a change in the price of the product.
E)producers are relatively sensitive to a change in the quantity demanded.

Accepted Answer

An elastic demand means that consumers are relatively sensitive to a change in the price of the product. This means that if the price of the product increases, the quantity demanded will decrease significantly, and if the price decreases, the quantity demanded will increase significantly.

Question 11

If the price elasticity of demand is equal to 4, a 1 percent increase in price will cause the quantity demanded to _____ by _____ percent.
A)increase;0.25
B)decrease;0.25
C)increase;4
D)decrease;25
E)decrease;4

Accepted Answer

If price elasticity of demand is 4, then for a 1% increase in price, the quantity demanded will decrease by 4%. Therefore, the correct answer is E, which states that the quantity demanded will decrease by 4%.

Question 12

If a 50 percent increase in the price of pizza results in a 25 percent decrease in the quantity demanded of pizza, then the elasticity of demand for pizza:
A)is equal to 0.5 and demand is inelastic.
B)is equal to 0.5 and demand is elastic.
C)is equal to 2 and is elastic.
D)is equal to 2 and is inelastic.
E)cannot be determined from the information provided.

Accepted Answer

The answer of If a 50 percent increase in the...

Question 13

When the elasticity of demand for a particular good is less than 1:
A)demand is elastic.
B)demand is inelastic.
C)the elasticity of demand is unit-elastic.
D)the good is a substitute.
E)the good is a normal good.

Accepted Answer

When the elasticity of demand for a particular good is less than 1, it means that the percentage change in the quantity demanded is less than the percentage change in price. This indicates that demand is inelastic, which means that consumers are not very responsive to changes in price.

Question 14

Assume that the price elasticity of demand for a commodity is 0.20.A 10 percent increase in price will be followed by a:
A)20 percent increase in the quantity demanded.
B)2 percent decrease in the quantity demanded.
C)20 percent decrease in the quantity demanded.
D)0.2 percent decrease in the quantity demanded.
E)2 percent increase in the quantity demanded.

Accepted Answer

The formula for price elasticity of demand is % change in quantity demanded / % change in price. Given that the price elasticity of demand is 0.20, a 10% increase in price will lead to a 10% x 0.20 = 2% decrease in the quantity demanded (i.e. 0.2 x 10 = 2). Therefore, option B is correct.

Question 15

Price elasticity of demand is a measure of the:
A)extent of competition in the market.
B)change in the purchase of a product relative to a change in income.
C)change in the quantity demanded due to factors other than price.
D)degree of consumer responsiveness to changes in price.
E)percentage change in the prices of two related products.

Accepted Answer

Price elasticity of demand measures the degree of consumer responsiveness to changes in price. It measures the percentage change in the quantity demanded of a good in response to a percentage change in its price while keeping all other factors constant. Thus, the correct choice is D: degree of consumer responsiveness to changes in price.

Question 16

If demand is unit-elastic, a 25 percent increase in price will result in:
A)a 25 percent change in total revenue.
B)no change in quantity demanded.
C)a 1 percent decrease in quantity demanded.
D)a 25 percent decrease in quantity demanded.
E)a 100 percent change in quantity demanded.

Accepted Answer

The answer of If demand is unit-elastic, a 25 percent...

Question 17

When the manager of a local movie theater raises the price of movie tickets from $7.50 to $8.50 total revenue falls.This means that:
A)the demand for movie tickets is highly elastic.
B)the supply of movie ticket is perfectly elastic.
C)the supply of movie tickets is elastic.
D)the demand for movie tickets is inelastic.
E)the supply of movie tickets is inelastic.

Accepted Answer

The answer of When the manager of a local movie...

Question 18

If a 10 percent increase in the price of gasoline results in a 2 percent decrease in the quantity demanded of gasoline, then the elasticity of demand for gasoline is:
A)equal to 0.2 and demand is inelastic.
B)equal to 0.2 and demand is elastic.
C)equal to 0.02 and demand is elastic.
D)equal to 0.5 and demand is inelastic.
E)equal to 0.5 and the demand is elastic.

Accepted Answer

The elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price, which gives 2% / 10% = 0.2. Since the value is less than 1, demand is inelastic.

Question 19

Which of the following is true of price elasticity of demand?
A)It measures the responsiveness of quantity demanded or quantity supplied to a change in one of the determinants of demand and/or supply.
B)It is calculated as the percentage change in the quantity demanded of a product divided by the percentage change in the price of that product.
C)It is calculated as the percentage change in the demand for a good divided by the percentage change in income, everything else held constant.
D)It measures the responsiveness of demand to a change in the quantity supplied.
E)It is calculated as the percentage change in the quantity demanded for one good divided by the percentage change in the price of a related good, everything else held constant.

Accepted Answer

Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.

Question 20

If a 1 percent change in the price of a good causes a 1 percent change in the quantity demanded of that good, then demand is said t be:
A)perfectly elastic.
B)elastic.
C)unit-elastic.
D)inelastic.
E)perfectly inelastic.

Accepted Answer

If a 1 percent change in price causes an equal 1 percent change in quantity demanded, then the price elasticity of demand is equal to 1. This is the definition of unit elasticity.

Quiz 4: Elasticity: Demand and Supply

The less responsive consumers are to a change in the price of a product:

What would be the consequences of a 10 percent decrease in the price of a good for which price elasticity of demand is 5?

If demand is perfectly inelastic, then:

If the percentage change in quantity demanded of a good is greater than the percentage change in price that caused it, then demand for the good is _____.

Suppose 50 loaves of bread are demanded at a particular price.If that price rises by 2 percent, the quantity demanded decreases to 49.5 loaves of bread.This implies:

If a price increase from $20 to $40 causes quantity demanded to decrease from 100 units to 50 units, one can conclude that demand for the product is _____.

Which of the following is an example of inelastic demand?

Assume that the demand curve for a certain good is a vertical line.This vertical demand curve illustrates the idea that:

Which of the following is explained by the price elasticity of demand?

If a product has an elastic demand, this means that:

If the price elasticity of demand is equal to 4, a 1 percent increase in price will cause the quantity demanded to _ by _ percent.

If a 50 percent increase in the price of pizza results in a 25 percent decrease in the quantity demanded of pizza, then the elasticity of demand for pizza:

When the elasticity of demand for a particular good is less than 1:

Assume that the price elasticity of demand for a commodity is 0.20.A 10 percent increase in price will be followed by a:

Price elasticity of demand is a measure of the:

If demand is unit-elastic, a 25 percent increase in price will result in:

When the manager of a local movie theater raises the price of movie tickets from $7.50 to $8.50 total revenue falls.This means that:

If a 10 percent increase in the price of gasoline results in a 2 percent decrease in the quantity demanded of gasoline, then the elasticity of demand for gasoline is:

Which of the following is true of price elasticity of demand?

If a 1 percent change in the price of a good causes a 1 percent change in the quantity demanded of that good, then demand is said t be: