Ag Econ Test 1

The smaller the price elasticity of demand, the A) more likely the product is a luxury. B) smaller the responsiveness of quantity demanded to change in price. C) more substitutes the product has. D) greater the responsiveness of quantity demanded to change in price.

B

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10% decrease in the quantity of the good demanded? A) a 7.5 increase in the price of the good B) a 13.33% increase in the price of the good C) an increase in the price of the good from &7.50 to $10 D) an increase in the price of the good from $10 to $17.50

B

When studying how some even or policy affects a market, elasticity provides information on the A) equity effects on the market by identifying the winners and losers. B) magnitude. of the effect on the market. C) speed of adjustment of the market in response to the event or policy. D) number of market participants who are directly affected by the event or policy.

B

Demand is said to be price elastic if A) the price of the good responds substantially to changes in demand. B) demand shifts substantially when income or the expected future price of the good changes. C) buyers do not respond much to changes in the price of the good. D) buyers respond substantially to changes in the price of the good.

D