EC 500 Elasticity
Refer to Figure 5-2. As price falls from Pa to Pb, which demand curve represents the most elastic demand? a. D1 b. D2 c. D3 d. All of the above are equally elastic.
a. D1
Which of the following expressions is valid for the price elasticity of demand? a. Price elasticity of demand = . b. Price elasticity of demand = . c. Price elasticity of demand = . d. Price elasticity of demand = .
a. Price elasticity of demand = .
The flatter the demand curve through a given point, the a. greater the price elasticity of demand at that point. b. closer the price elasticity of demand will be to the slope of the curve. c. greater the absolute value of the change in total revenue when there is a movement from that point upward and to the left along the demand curve. d. smaller the price elasticity of demand at that point.
a. greater the price elasticity of demand at that point.
Which of the following is not a determinant of the price elasticity of demand for a good? a. the steepness or flatness of the supply curve for the good b. the time horizon c. the definition of the market for the good d. the availability of substitutes for the good
a. the steepness or flatness of the supply curve for the good
Refer to Figure 5-5. Using the midpoint method, between prices of $48 and $54, price elasticity of demand is about a. 4.33. b. 5.67. c. 0.92. d. 3.89.
b. 5.67.
Demand is elastic if the price elasticity of demand is a. equal to 1. b. greater than 1. c. equal to 0. d. less than 1.
b. greater than 1.
The greater the price elasticity of demand, the a. more likely the product is a necessity. b. greater the responsiveness of quantity demanded to a change in price. c. smaller the responsiveness of quantity demanded to a change in price. d. greater the percentage change in price over the percentage change in quantity demanded.
b. greater the responsiveness of quantity demanded to a change in price.
The price elasticity of demand measures a. how much more of a good consumers will demand when incomes rise. b. the extent to which demand increases as additional buyers enter the market. c. buyers' responsiveness to a change in the price of a good. d. the movement along a supply curve when there is a change in demand.
c. buyers' responsiveness to a change in the price of a good.
If demand is price inelastic, then when price rises, total revenue a. may rise, fall, or remain unchanged. More information is need to determine the change in total revenue with certainty. b. will remain unchanged. c. will rise. d. will fall.
c. will rise.
Cross-price elasticity of demand measures how a. strongly normal or inferior a good is. b. the price of one good changes in response to a change in the price of another good. c. the quantity demanded of one good changes in response to a change in the quantity demanded of another good. d. the quantity demanded of one good changes in response to a change in the price of another good.
d. the quantity demanded of one good changes in response to a change in the price of another good.
