Econ 120 Chapter 4
If demand is ______ with respect to price, a price increase will ______ total revenue. a.) elastic; increase b.) inelastic; increase c.) unit elastic; decrease d.) inelastic; decrease
b
If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then demand for textbooks is: a.) negative. b.) inelastic. c.) elastic. d.) unit elastic.
b
If the price elasticity of demand for a good is greater than one, then the demand for that good is: a.) elastic. b.) inelastic. c.) unit elastic. d.) perfectly elastic.
a
When Joe's Gas raises its price for regular unleaded gasoline, total revenue from regular unleaded gas falls to zero. It must be the case that a.) the demand for Joe's regular unleaded gasoline is perfectly elastic. b.) the demand for Joe's regular unleaded is inelastic. c.) there are not many good substitutes for Joe's regular unleaded gasoline. d.) consumers are switching to premium grades of gasoline.
a
If 20% increase in the price of a good leads to a 60% decrease in the quantity demanded, then what is the price elasticity of demand? a.) 30. b.) 3. c.) 1/3. d.) 1/6.
b
Suppose that if the price of plane tickets increased, more people would choose to travel by train. If this happened, you would know that: a.) plane tickets are an inferior good. b.) the cross-price elasticity between plane tickets and train tickets is positive. c.) the cross-price elasticity between plane tickets and train tickets is negative. d.) plane tickets and train tickets are complements.
b
Suppose two demand curves intersect and so have a point in common. At that point, demand shown by the steeper curve will be _______ the flatter curve. a.) more elastic than b.) less elastic than c.) as elastic as d.) more likely to be unit elastic than
b
When calculating price elasticity of demand, if the percentage change in price is negative, then the percentage change in quantity demanded is typically: a.) greater than one. b.) positive. c.) less than one. d.) negative.
b
The price elasticity of demand for a good measures the responsiveness of: a.) demand to a one percent change in price of that good. b.) price to a one percent change in the demand for that good. c.) quantity demanded to a one percent change in price of that good. d.) price to a one percent change in the quantity demanded of that good.
c
If consumers completely cease purchasing a product when its price increases by any amount, then demand is: a.) inelastic. b.) perfectly inelastic. c.) unit elastic. d.) perfectly elastic.
d
If most consumer goods and services are ______, then most income elasticities are ______. a.) normal; negative b.) inferior; positive c.) normal; greater than one d.) normal; positive
d
If two products are substitutes, then the: a.) income elasticity of demand for both will be high. b.) price elasticity of demand for both will be positive. c.) cross-price elasticity of demand between them will be negative. d.) cross-price elasticity of demand between them will be positive.
d
The responsiveness of the quantity demanded of one good to a change in the price of a different good is measured by the: a.) price elasticity of demand. b.) income elasticity of demand. c.) price elasticity of supply. d.) cross-price elasticity of demand.
d
The tendency for consumers to purchase more of a good or service as its price falls is captured by: a.) the law of supply. b.) the law of increasing cost. c.) cross-price elasticity of demand. d.) the law of demand.
d