Elasticity of Demand

The formula for the price elasticity of demand is: Multiple choice question. QPQP × 1slope1slope ΔQΔPΔQΔP × 1slope1slope PQPQ × 1slope1slope PQPQ ÷ 1slope

(P/Q) x (1/slope)

Which of the following is the formula for the price elasticity of demand? Multiple choice question. QPQP × 1slope1slope PQPQ × 1slope1slope PQPQ ÷ 1slope1slope ΔQΔPΔQΔP × 1slope

(P/Q) x (1/slope)

If quantity demanded goes down by 3 percent when price rises by 6 percent, then the price elasticity of demand is: Multiple choice question. 9 0.5 2 3

0.5

If a 2 percent increase income leads to a 4 percent increase in the quantity of gasoline demanded, then the income elasticity of demand for gasoline is: Multiple choice question. -0.5 2 -2 0.5

2

If the owners of a local clothing boutique increase the price of their merchandise, then their total revenue Multiple choice question. could fall since fewer people may be willing to shop there. will increase since the owners are charging more.

could fall since fewer people may be willing to shop there.

If the owners of a nearby restaurant decrease the price of their food, then their total revenue Multiple choice question. will decrease since the restaurant is charging less. could increase since more people may be willing to eat there.

could increase since more people may be willing to eat there.

If the price elasticity of demand is greater than 1 and price increases, then total expenditure will Multiple choice question. increase. decrease. stay the same.

decrease

If there's an increase in the supply of bottled water (a rightward shift), then total revenue from the sale of bottled water will Multiple choice question. decrease if the price elasticity of demand for bottled water is greater than one. decrease if the price elasticity of demand for bottled water less than one. increase regardless of the price elasticity of demand for bottled water.

decrease if the price elasticity of demand for bottled water less than one.

If the supply of nail polish shifts to the left, then total expenditure on nail polish will Multiple choice question. decrease if the price elasticity of demand for nail polish is greater than one. decrease if the price elasticity of demand for nail polish is less than one. definitely increase since the price of nail polish will increase.

decrease if the price elasticity of demand for nail polish is greater than one.

If the price elasticity of demand is less than 1 and price decreases, then total expenditure will Multiple choice question. stay the same. increase. decrease.

decrease.

If the price elasticity of demand for restaurant meals is 1.63, then the demand for restaurant meals is _____. Multiple choice question. inelastic elastic unit elastic

elastic

True or false: economists believe that our preferences for different goods and services do not change over time. True false question.TrueFalse

false

Which of the following goods has the lowest price elasticity of demand? Multiple choice question. food furniture beer public transportation

food

Changes in price and changes in total expenditure move in the opposite direction when the price elasticity of demand is Multiple choice question. less than zero. less than 1. greater than 1.

greater than 1.

Which of the following goods has the highest price elasticity of demand? Multiple choice question. coffee green peas tobacco medical care

green peas

Given that there are many different kinds of cereal that people can buy, the price elasticity of demand for any particular brand of cereal is likely to be relatively _____. Multiple choice question. high low

high

When a good has many close substitutes, the price elasticity of demand tends to be relatively _____. Multiple choice question. high low

high

Low-income families spend a greater share of their budget on electricity than do high-income families. Thus, we would expect the price elasticity of demand for electricity to be _____ for low-income families than for high-income families. Multiple choice question. lower higher

higher

The price elasticity of demand for water will be _____ in the long run than in the short run. Multiple choice question. lower higher

higher

If a store has a 10% off everything sale, then the store's total revenue will fall Multiple choice question. if the demand for the store's products is elastic with respect to price. if the demand for the store's products is inelastic with respect to price. no matter what because everything in the store is cheaper.

if the demand for the store's products is inelastic with respect to price.

If an early frost damages this year's orange crop, causing the supply curve for oranges to shift to the left, then total revenue from the sale of oranges will Multiple choice question. definitely fall since fewer oranges will be sold. increase if the demand for oranges is inelastic with respect to price. increase if the demand for oranges is elastic with respect to price.

increase if the demand for oranges is inelastic with respect to price.

If the price elasticity of demand is greater than 1 and price decreases, then total expenditure will Multiple choice question. decrease. stay the same. increase.

increase.

If demand is perfectly elastic with respect to price, then the price elasticity of demand is _____. Multiple choice question. one infinite zero

infinite

If demand is perfectly elastic with respect to price, then the price elasticity of demand is _____. Multiple choice question. one zero infinite

infinite

A consumer's weekly demand for gasoline is likely to be _____ price elastic than his or her yearly demand for gasoline. Multiple choice question. less more

less

A consumer's weekly demand for gasoline is likely to be _____ price elastic than his or her yearly demand for gasoline. Multiple choice question. more less

less

The law of demand states that people do _____ of what they want to do as the cost of doing it rises. Multiple choice question. more less

less

Changes in price and changes in total expenditure move in the same direction when the price elasticity of demand is Multiple choice question. greater than 1. less than zero. less than 1.

less than 1.

Given that most people spend a relatively small share of their budget on pencils, we would expect the elasticity of demand for pencils to be relatively _____. Multiple choice question. high low

low

When the price elasticity of demand is greater than 1, changes in price and changes in total expenditure Multiple choice question. move in the same direction. move in opposite directions. cannot be determined.

move in opposite directions.

The income elasticity of demand is Multiple choice question. the change in quantity demanded in response to a 1 percent change in income. the percentage change in quantity demanded in response to a 1 percent change in income. the percentage change in quantity demanded in response to a one dollar change in income.

the percentage change in quantity demanded in response to a 1 percent change in income.

Price × quantity equals ________. Multiple select question. seller's surplus total expenditure total revenue

total expenditure total revenue

If the price elasticity of demand for wine is 1.00, then the demand for wine is _____. Multiple choice question. elastic unit elastic inelastic

unit elastic

If quantity demanded goes down by 3 percent when price rises by 6 percent, then the price elasticity of demand is: Multiple choice question. 3 0.5 2 9

.5

If a 2 percent increase income leads to a 4 percent increase in the quantity of gasoline demanded, then the income elasticity of demand for gasoline is: Multiple choice question. 0.5 2 -0.5 -2

2

If the income elasticity of demand for airplane tickets is positive, then airplane tickets are Multiple choice question. a complementary good. an inferior good. a superior good. a normal good.

a normal good.

If the cross-price elasticity of demand for bike helmets with respect to the price of bikes is -0.25, then if the price of bikes increases by 10 percent, the quantity of bike helmets demanded will Multiple choice question. decrease by 0.25 percent. increase by 0.25 percent. decrease by 2.5 percent. decrease by 25 percent.

decrease by 2.5 percent.

If demand is perfectly inelastic with respect to price, then the price elasticity of demand is _____. Multiple choice question. zero one infinite

zero

If the quantity of Big Macs demanded decreases by 4 percent in response to an 8 percent decrease in the price of Whoppers, then the cross-price elasticity of demand for Big Macs with respect to the price of Whoppers is: Multiple choice question. 2 -2 0.5 -0.5

0.5

If quantity demanded goes up by 10 percent when price falls by 2 percent, then the price elasticity of demand is: Multiple choice question. 5 .2 12 8

5

If quantity demanded goes up by 10 percent when price falls by 2 percent, then the price elasticity of demand is: Multiple choice question. 5 8 12 .2

5

If the demand for economy-class airline tickets is elastic with respect to price, then if the price of economy-class airline tickets increases, then total expenditure will _____. Multiple choice question. decrease stay the same If demand is elastic with respect to price, total expenditure will decrease in response to a price increase. If demand is elastic with respect to price, total expenditure will decrease in response to a price increase. increase If demand is elastic with respect to price, total expenditure will decrease in response to a price increase.

decrease

Suppose the demand for first-class airline tickets is inelastic with respect to price. If the price of first-class airline tickets decreases, then total expenditure will _____. Multiple choice question. If demand is inelastic with respect to price, total expenditure will decrease in response to a price decrease. If demand is inelastic with respect to price, total expenditure will decrease in response to a price decrease. increase decrease stay the same If demand is inelastic with respect to price, total expenditure will decrease in response to a price decrease.

decrease

Which of the following goods has the highest price elasticity of demand? Multiple choice question. green peas medical care coffee tobacco Correct Answer green peas

green peas

True or false: economists believe that our preferences for different goods and services can be influenced by our peers. True false question.TrueFalse

true

If a 6 percent decrease income leads to a 9 percent increase in the quantity of lottery tickets demanded, then the income elasticity of demand for lottery tickets is: Multiple choice question. -0.33 0.33 1.5 -1.5

-1.5

If the price elasticity of demand is zero, then demand is Multiple choice question. perfectly inelastic. perfectly elastic. unit elastic.

perfectly inelastic.

Total expenditure equals: Multiple select question. buyer's surplus total revenue P×Q

total revenue P×Q

If a 6 percent decrease income leads to a 9 percent increase in the quantity of lottery tickets demanded, then the income elasticity of demand for lottery tickets is: Multiple choice question. -0.33 1.5 -1.5 0.33

-1.5

The elasticity of demand for a given brand of ice cream is likely to be _____ than the elasticity of demand for ice cream in general. Multiple choice question. higher lower

higher

If steak is a normal good, then the income elasticity of demand for steak will be Multiple choice question. negative. exactly equal to 1. positive. zero.

positive

The income elasticity of demand for guitars is Multiple choice question. the percentage by which the quantity of guitars demanded changes in response to a 1 dollar change in income. the change in the quantity of guitars demanded in response to a 1 percent change in income. the percentage by which the quantity of guitars demanded changes in response to a 1 percent change in income.

the percentage by which the quantity of guitars demanded changes in response to a 1 percent change in income.

If the income elasticity of demand for hamburgers is -0.6, then a 1 percent increase income will lead to a _____ in the quantity of hamburgers demanded. Multiple choice question. 0.6 percent decrease 6 percent increase 6 percent decrease 0.6 percent increase

0.6 percent decrease

If the cross-price elasticity of demand for bike helmets with respect to the price of bikes is -0.25, then if the price of bikes increases by 10 percent, the quantity of bike helmets demanded will Multiple choice question. decrease by 2.5 percent. decrease by 0.25 percent. increase by 0.25 percent. decrease by 25 percent.

decrease by 2.5 percent.

Suppose most people either fly or drive when they go on vacation. If airfare increases, then you would expect _____ people to fly and _____ people to drive. Multiple choice question. If airfare increases, then some people will start driving instead of flying. fewer; fewer If airfare increases, then some people will start driving instead of flying. If airfare increases, then some people will start driving instead of flying. fewer; more more; more more; fewer

fewer; more

If the price of lawnmowers goes up by 9 percent and the quantity of lawnmowers demanded falls by 5 percent, then the total expenditure on lawnmowers will Multiple choice question. decrease. increase. If the percentage increase in price is greater than the percentage decrease in quantity demanded, then total expenditure will increase. If the percentage increase in price is greater than the percentage decrease in quantity demanded, then total expenditure will increase. remain unchanged. If the percentage increase in price is greater than the percentage decrease in quantity demanded, then total expenditure will increase.

increase.

True or false: Once people have acquired the food, shelter, and clothing required to maintain their health, economists refer primarily to the goods and services people "want" rather than those they "need". True false question.TrueFalse

true

Once people have achieved bare subsistence levels of consumption, economists emphasize that we can talk mainly in terms of people's ______. Multiple choice question. needs wants must-haves

wants

If a 12 percent decrease income leads to a 3 percent decrease in the quantity of pedicures demanded, then the income elasticity of demand for pedicures is: Multiple choice question. 0.25 4 -0.25 -4

0.25

If quantity demanded goes down by 3 percent when price rises by 6 percent, then the price elasticity of demand is: Multiple choice question. 2 9 3 0.5

0.5

If the quantity of peanuts demanded increases by 6 percent in response to a 3 percent increase in the price of almonds, then the cross-price elasticity of demand for peanuts with respect to the price of almonds is: Multiple choice question. 0.2 2 -2 0.5

2

If the quantity of peanuts demanded increases by 6 percent in response to a 3 percent increase in the price of almonds, then the cross-price elasticity of demand for peanuts with respect to the price of almonds is: Multiple choice question. 0.5 -2 2 0.2

2

If the income elasticity of demand for lottery tickets is negative, then lottery tickets are Multiple choice question. a normal good. an inferior good. a complementary good. a superior good.

an inferior good.

The law of demand states that people do less of what they want to do Multiple choice question. when they don't need to do it. as the cost of doing it falls. as the cost of doing it rises.

as the cost of doing it rises.

If the price of sofas goes up by 10 percent and the quantity of sofas demanded falls by 15 percent, then the total expenditure on sofas will Multiple choice question. If the percentage increase in price is less than the percentage decrease in quantity demanded, then total expenditure will decrease. If the percentage increase in price is less than the percentage decrease in quantity demanded, then total expenditure will decrease. increase. If the percentage increase in price is less than the percentage decrease in quantity demanded, then total expenditure will decrease. decrease. remain unchanged.

decrease.

If the price of sofas goes up by 10 percent and the quantity of sofas demanded falls by 15 percent, then the total expenditure on sofas will Multiple choice question. remain unchanged. If the percentage increase in price is less than the percentage decrease in quantity demanded, then total expenditure will decrease. increase. decrease. If the percentage increase in price is less than the percentage decrease in quantity demanded, then total expenditure will decrease. If the percentage increase in price is less than the percentage decrease in quantity demanded, then total expenditure will decrease.

decrease.

If the cross-price elasticity of demand for motorcycles with respect to the price of cars is 0.05, then if the price of cars increases by 10 percent, the, the quantity of motorcycles demanded will Multiple choice question. increase by 5 percent. increase by 0.5 percent. decrease by 5 percent. increase by 0.05 percent.

increase by 0.5 percent.

If the price elasticity of demand is infinite, then demand is Multiple choice question. perfectly inelastic. perfectly elastic. unit elastic.

perfectly elastic.

The percentage change in quantity demanded that results from a 1 percent change in price is the Multiple choice question. slope of the demand curve. price elasticity of demand. cross-price elasticity of demand.

price elasticity of demand.

The cross-price elasticity of demand for snowboards with respect to the price of skis is Multiple choice question. the change in the quantity of snowboards demanded in response to a 1 dollar change in the price of skis. the change in the quantity of snowboards demanded in response to a 1 percent change in the price of skis. the percentage change in the quantity of snowboards demanded in response to a 1 percent change in the price of skis.

the percentage change in the quantity of snowboards demanded in response to a 1 percent change in the price of skis.

If a 5 percent increase income leads to a 2.5 percent decrease in the quantity of oatmeal demanded, then the absolute value of the income elasticity of demand for oatmeal is ______ (answer in decimals).

0.5

If the income elasticity of demand for guitars is 0.2, then a 10 percent increase income will lead to a _____ in the quantity of guitars demanded. Multiple choice question. 2 percent decrease 2 percent increase 0.2 percent increase 0.2 percent decrease

2 percent increase

Suppose that when the price of a sandwich from Dagwood's Deli is $5, there are 200 people who buy 1 sandwich per week and 100 people who buy 2 sandwiches per week. Thus, at a price of $5, the market demand each week for sandwiches from Dagwood's Deli is ______.(enter a numeric value).

400

If the cross-price elasticity of demand for ice cream with respect to the price of apple pie is negative, then the two goods are Multiple choice question. inferior goods. complements. substitutes. normal goods.

complements

If the cross-price elasticity of demand for yogurt with respect to the price of granola is negative, then the two goods are Multiple choice question. normal goods. complements. inferior goods. substitutes.

complements

Suppose the demand for first-class airline tickets is inelastic with respect to price. If the price of first-class airline tickets decreases, then total expenditure will _____. Multiple choice question. If demand is inelastic with respect to price, total expenditure will decrease in response to a price decrease. decrease stay the same If demand is inelastic with respect to price, total expenditure will decrease in response to a price decrease. If demand is inelastic with respect to price, total expenditure will decrease in response to a price decrease. increase

decrease

If the price elasticity of demand for beer is 1.19, and the price of beer goes up by 1 percent, then the quantity of beer demanded will Multiple choice question. go down by 1.19 percent. go down by 119 percent. go up by 1.19 percent. go up by 119 percent.

go down by 1.19 percent.

Suppose most people either drink coffee or tea in the morning. If the price of tea increases, then you would expect _____ people to drink coffee and _____ people to drink tea. Multiple choice question. more; fewer If the price of tea increases, then some people are likely to switch to coffee instead. If the price of tea increases, then some people are likely to switch to coffee instead. fewer; more fewer; fewer If the price of tea increases, then some people are likely to switch to coffee instead. more; more

more; fewer

If the price elasticity of demand for beer is 1.19, and the price of beer goes up by 1 percent, then the quantity of beer demanded will Multiple choice question. go down by 1.19 percent. go up by 1.19 percent. go down by 119 percent. go up by 119 percent.

go down by 1.19 percent.

The elasticity of demand for a given brand of ice cream is likely to be _____ than the elasticity of demand for ice cream in general. Multiple choice question. lower higher

higher

Suppose a local politician proposes that the price of lottery tickets be cut in half in order to reduce the total amount that people spend on lottery tickets. This plan will Multiple choice question. only be effective if the demand for lottery tickets is inelastic with respect to price. only be effective if the demand for lottery tickets is elastic with respect to price. surely be effective since total expenditure obviously will fall if lottery tickets are cheaper.

only be effective if the demand for lottery tickets is inelastic with respect to price.

When the price of a good goes up, part of the reason consumers purchase less of the good is that they Multiple choice question. switch to more expensive substitutes. switch to less expensive substitutes. switch to more expensive complements.

switch to less expensive substitutes.

When the price of a good or service goes up, consumers will tend to Multiple choice question. switch to less expensive substitutes. switch to more expensive substitutes. maintain their current purchasing patterns

switch to less expensive substitutes.

If the price elasticity of demand for electricity is 1.20, then if the price of electricity goes up by 10 percent, the quantity of electricity demanded will Multiple choice question. go down by 12 percent. go up by 1.2 percent. go up by 12 percent. go down by 1.2 percent

go down by 12 percent.

If the price elasticity of demand for milk is 0.4, then if the price of milk goes up by 20 percent, the quantity of milk demanded will Multiple choice question. go up by 0.8 percent go down by 0.8 percent. go up by 8 percent. go down by 8 percent. Correct Answer go down by 8 percent.

go down by 8 percent.

If the demand for first-class airline tickets is inelastic with respect to price, then if the price of first-class airline tickets increases, then total expenditure will _____. Multiple choice question. If demand is inelastic with respect to price, total expenditure will increase in response to a price increase. increase If demand is inelastic with respect to price, total expenditure will increase in response to a price increase. decrease stay the same If demand is inelastic with respect to price, total expenditure will increase in response to a price increase.

increase

An increase in the supply of dog food will lead the total expenditure on dog food to Multiple choice question. increase if the price elasticity of demand for dog food is less than one. decrease since the price of dog food will fall. increase if the price elasticity of demand for dog food is greater than one.

increase if the price elasticity of demand for dog food is greater than one.

The cross-price elasticity of demand is Multiple choice question. the change in the quantity demanded of one good in response to a 1 percent change in the price of all other goods. the change in the quantity demanded of one good in response to a 1 percent change in the price of another good. the percentage change in the quantity demanded of one good in response to a 1 percent change in the price of another good.

the percentage change in the quantity demanded of one good in response to a 1 percent change in the price of another good.

The cross-price elasticity of demand for popcorn with respect to the price of butter is: Multiple choice question. the change in the quantity of popcorn demanded in response to a 1 percent change in the quantity of butter produced. the percentage change in the price of popcorn in response to a 1 dollar change in the price of butter. the percentage change in the quantity of popcorn demanded in response to a 1 percent change in the price of butter.

the percentage change in the quantity of popcorn demanded in response to a 1 percent change in the price of butter.

The price elasticity of demand is Multiple choice question. the percentage change in quantity demanded that results from a 1 percent change in price. the change in quantity demanded divided by the change in price. the percentage change in quantity demanded that results from a one dollar change in price. the change in quantity demanded that results from a 1 percent change in price.

the percentage change in quantity demanded that results from a 1 percent change in price.

If the price elasticity of demand for coffee is 0.25, and the price of coffee goes down by 1 percent, then the quantity of coffee demanded will Multiple choice question. go up by 25 percent. go up by 0.25 percent. go down by 0.25 percent. go down by 25 percent.

go up by 0.25 percent.

If the price elasticity of demand for paper is 0.90, then if the price of paper goes down by 10 percent, the quantity of paper demanded will Multiple choice question. go down by 9 percent. go up by 9 percent. go down by 0.9 percent go up by 0.9 percent.

go up by 9 percent.

If a store has a 10% off everything sale, then the store's total revenue will fall Multiple choice question. no matter what because everything in the store is cheaper. if the demand for the store's products is inelastic with respect to price. if the demand for the store's products is elastic with respect to price.

if the demand for the store's products is inelastic with respect to price.

If the demand for first-class airline tickets is inelastic with respect to price, then if the price of first-class airline tickets increases, then total expenditure will _____. Multiple choice question. If demand is inelastic with respect to price, total expenditure will increase in response to a price increase. increase If demand is inelastic with respect to price, total expenditure will increase in response to a price increase. stay the same If demand is inelastic with respect to price, total expenditure will increase in response to a price increase. decrease

increase

Suppose a local politician proposes that the price of lottery tickets be cut in half in order to reduce the total amount that people spend on lottery tickets. This plan will Multiple choice question. surely be effective since total expenditure obviously will fall if lottery tickets are cheaper. only be effective if the demand for lottery tickets is elastic with respect to price. only be effective if the demand for lottery tickets is inelastic with respect to price.

only be effective if the demand for lottery tickets is inelastic with respect to price.