Homework 8: Elasticity

If the price of salt increases and the quantity demanded does not​ change, then: A) demand is perfectly inelastic. B) the price elasticity of demand is equal to zero. C) the demand curve for salt is horizontal. D) Both answers A and B are correct.

Both answers A and B are correct.

The price elasticity of demand depends on the A) number of available substitutes. B) proportion of​ consumers' budgets spent on the good. C) extent to which the commodity is a luxury. D) all of the above

all of the above

According to the total revenue​ test, a price cut increases total revenue if demand is: A) elastic. B) inelastic. C) unit elastic. D) perfectly inelastic.

elastic.

Which goods have more elastic​ demands? A) goods with many substitutes B) goods which are necessities C) goods with few substitutes D) goods whose purchase represents a small percentage of income

goods with many substitutes

If the demand for a good is​ elastic, the price elasticity of demand is​ ________. A) greater than 1 B) less than zero C) equal to 1 D) between 0 and 1

greater than 1

If the price elasticity of demand for peanut butter is​ 2.4, then peanut butter A) has an elastic demand. B) has a unit elastic demand. C) is a normal good. D) has an inelastic demand.

has an elastic demand.

The demand for a good is more price elastic: A) if the good is a necessity rather than a luxury. B) if closer substitutes are available. C) in the short run than in the long run. D) if the share of the good in the average​ consumer's budget is smaller.

if closer substitutes are available.

For baseball card​ collectors, Babe Ruth baseball cards from 1927 would most likely have a perfectly: A) elastic supply. B) inelastic demand. C) inelastic supply. D) elastic demand.

inelastic supply.

If a consumer is relatively insensitive to changes in the price of a​ good, then the​ consumer's demand for the good is: A) perfectly elastic. B) elastic. C) inelastic. D) unit elastic.

inelastic.

If the price elasticity is between 0 and​ 1, demand is A) inelastic. B) unit elastic. C) perfectly elastic. D) elastic.

inelastic.

If the quantity demanded changes by a relatively small amount for a given change in​ price, then demand is A) perfectly elastic. B) inelastic. C) perfectly inelastic. D) elastic.

inelastic.

A supply curve that is horizontal reflects a supply that: A) is elastic. B) has a zero elasticity. C) is inelastic. D) is unit elastic.

is elastic.

Demand is price inelastic if a relatively​ ________ price increase leads to a relatively​ ________ in the quantity demanded. A) ​large; small decrease B) ​small; large increase C) ​large; small increase D) ​small; large decrease

large; small decrease

If the price of a good increases from​ $3 to​ $4, and the quantity demand remains​ unchanged, then the demand is A) perfectly inelastic. B) somewhat elastic. C) infinite. D) perfectly elastic.

perfectly inelastic.

If the supply curve is vertical then supply is A) perfectly elastic. B) perfectly inelastic. C) relatively elastic. D) relatively inelastic.

perfectly inelastic.

The elasticity of supply for paintings by Monet is A) inelastic. B) perfectly elastic. C) unit elastic. D) perfectly inelastic.

perfectly inelastic.

The concept of elasticity of supply measures the responsiveness of the A) quantity demanded to a change in the quantity supplied. B) quantity supplied to a change in the price. C) quantity supplied to a change in the quantity demanded. D) price to a change in the quantity supplied.

quantity supplied to a change in the price.

Demand is price elastic if a A) relatively large price increase leads to a relatively small decrease in the quantity demanded. B) price increase leads to an increase in the quantity demanded. C) price increase leads to a decrease in the quantity demanded. D) relatively small price increase leads to a relatively large decrease in the quantity demanded.

relatively small price increase leads to a relatively large decrease in the quantity demanded.

For many​ goods, the price elasticity of demand increases over time because A) inflation increases all prices and incomes over time. B) the ability to find substitutes for a good whose price has risen increases over time. C) ​people's incomes tend to increase over time. D) None of the above answers is correct.

the ability to find substitutes for a good whose price has risen increases over time.

When the demand for a good is perfectly​ elastic, ________. A) total revenue is as large as possible B) the price elasticity of demand is zero C) the demand curve for the good is vertical D) the price elasticity of demand is infinite

the price elasticity of demand is infinite

Demand is inelastic if: A) the price elasticity of demand is greater than 1. B) a large change in quantity demanded results in a small change in price. C) the price elasticity of demand is less than 1. D) the quantity demanded is very responsive to changes in price.

the price elasticity of demand is less than 1.

A determinant of the price elasticity of demand is A) whether the good is a durable or a nondurable. B) the availability of resources used in the production of the product. C) the proportion of the​ consumer's total budget spent on the good. D) how well consumers like the good.

the proportion of the​ consumer's total budget spent on the good.

The price elasticity of demand measures A) how sensitive the quantity demanded is to changes in demand. B) the responsiveness of the quantity demanded to changes in price. C) the slope of a budget curve. D) how often the price of a good changes.

the responsiveness of the quantity demanded to changes in price.

An important determinant of the price elasticity of supply is A) the proportion of the​ consumer's total budget spent on the good. B) how well consumers like the commodity. C) the time period firms have to adjust to a new price. D) whether the good is a durable or a nondurable.

the time period firms have to adjust to a new price.

If the price elasticity of demand for gasoline is 0.8 and the price elasticity of demand for plane tickets is 2.2 then the demand for gasoline is​ ________ and the demand for plane tickets is​ ________. A) ​elastic; elastic B) ​inelastic; inelastic C) ​elastic; inelastic D) ​inelastic; elastic

​inelastic; elastic

If the demand for a good is perfectly​ elastic, the price elasticity of demand is​ ________ and the demand curve is​ ________. A) ​zero; horizontal B) ​zero; vertical C) ​infinite; vertical D) ​infinite; horizontal

​infinite; horizontal