Econ 4 Quiz 3

If quantity decreases by 15 percent when prices increase 5 percent, then elasticity for this product is _____ -15. -10. -5. -3. -1.

-3.

When agricultural production increases, the total amount paid for agricultural products tends to _____ -increase because demand is perfectly elastic. -decrease because demand is price elastic. -increase because demand is price inelastic. -decrease because demand is price inelastic. -remain constant because demand is price inelastic.

-decrease because demand is price inelastic.

Table 5.1 Quantity Demanded | Price 10 | $50 20 | $40 30 | $30 40 | $20 50 | $10 Refer to Table 5.1. If price decreases from $50 to $30, the price elasticity of demand is _____ -10. -5. -3.3. -3. -0.5.

-3.

If the price of a product increases from $15 to $17 per unit and the quantity demanded decreases from 75 to 50 units, then the price elasticity of demand for this product is _____ -3.2. -12.5. -17. -2. -40.

-3.2.

Table 5.4 Refer to Table 5.4, which shows the quantity supplied and the quantity demanded for restaurant meals at different prices. Use the information to calculate the value of the price elasticity of demand for restaurant meals. -−1/2 -−5/3 -−3/5 -−3/7 -−7/3

-3/7?

If elasticity for a product is 2 and demand decreases by 10 percent, what was the percent price change for the product? -an increase of 2 percent -a decrease of 2 percent -an increase of 10 percent -a decrease of 5 percent -an increase of 5 percent

-a decrease of 5 percent

If elasticity for a product is 2 and demand increases by 10 percent, what was the percent price change for this product? -an increase of 2 percent -a decrease of 2 percent -an increase of 10 percent -a decrease of 5 percent -an increase of 5 percent

-a decrease of 5 percent

The price elasticity of demand is typically referred to as a/an _____ -absolute value. -negative value. -positive value. -number greater than 1. -number less than 1.

-absolute value.

The price elasticity of demand is useful because it measures the responsiveness of _____ to changes in _____. -taxpayers; demand -producers; supply -consumers; price -consumers; demand -producers; income

-consumers; price

If the price elasticity of demand for a product is 5, and prices increase 10 percent, then demand will _____ -increase by 5 percent. -increase by 10 percent. -increase by 50 percent. -decrease by 50 percent. -decrease by 3 percent

-decrease by 50 percent.

The _____ for a product indicate(s) the quantity of the product consumers are both willing and able to buy at each price during a given time period, other things constant. -scarce resources -unlimited wants -markets -demand -supply

-demand

A government-imposed price floor above the market price of milk would increase consumers' expenditures on milk only if _____ -demand is elastic. -supply is inelastic. -demand falls. -demand is inelastic. -supply is unit elastic.

-demand is inelastic.

A university administration's decision to raise tuition in order to increase revenue will be successful if _____ -the demand curve slopes downward. -demand is elastic. -demand is inelastic. -supply is elastic. -supply is inelastic.

-demand is inelastic.

If demand is price elastic, total revenue is _____ -directly related to quantity demanded. -inversely related to quantity demanded. -directly related to price. -directly related to price and inversely related to quantity demanded. -not related to either price or to quantity demanded.

-directly related to quantity demanded.

If a 5 percent increase in price leads to an 8 percent decrease in quantity demanded, demand is _____ -perfectly elastic. -elastic. -unit elastic. -inelastic. -perfectly inelastic.

-elastic.

If a price reduction leads to an increase in total revenue, demand is _____ -perfectly inelastic. -inelastic. -unit elastic. -elastic. -perfectly elastic.

-elastic.

If the price of Coca-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the demand for Coca-Cola is _____ -unit elastic. -perfectly elastic. -perfectly inelastic. -elastic. -inelastic.

-elastic.

Table 5.2 Refer to Table 5.2, which shows the price and quantity combinations for a product. The demand for the good is _____, and an increase in the price of the product from $40 to $60 per unit will _____ total revenue. -unit elastic; increase -elastic; decrease -unit elastic; not change -inelastic; increase -elastic; decrease

-elastic; decrease

Demand is inelastic only if the price elasticity of demand has an absolute value _____ -of 1. -greater than 1. -greater than 0 but less than 1. -less than 0. -greater than 5.

-greater than 0 but less than 1.

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the value of the price elasticity of demand is _____ -−1/3. -−2 1/3. -−1/4. -−3. -−2/3.

-−1/3.

Table 5.2 Refer to Table 5.2, which shows the change in the quantity demanded for a product as a result of a change in the price of the product. Use the information to calculate the value of the price elasticity of demand. -−2/3 -−1/3 -−3/5 -−5/3 -0

-−5/3

Table 5.1 Quantity Demanded | Price 10 | $50 20 | $40 30 | $30 40 | $20 50 | $10 Refer to Table 5.1. If price decreases from $50 to $40, the price elasticity of demand is _____ -10. -5. -3.3. -3. -0.5.

5.

If quantity increases by 15 percent when prices decrease 5 percent, then elasticity for this product is _____ -15. -10. -5. -3. -1.

-*TRY* 3.

Table 5.1 Quantity Demanded | Price 10 | $50 20 | $40 30 | $30 40 | $20 50 | $10 Refer to Table 5.1. If price increases from $10 to $30, the price elasticity of demand is _____ -10. -5. -3.3. -3. -0.5.

-0.5.

If the price of Coca-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the value of the price elasticity of demand for Coca-Cola is _____ -0.5. -0.25. -1. -3. -2.

-3.

If the price elasticity of demand for a product is 5, and prices decrease 10 percent then demand will _____ -increase by 5 percent. -increase by 10 percent. -increase by 50 percent. -decrease by 50 percent. -decrease by 3 percent.

- *TRY* increase by 50 percent.

What does price elasticity of demand measure? -slope of supply curve at a given price point -shifts of demand curve because of changes in price -shifts of supply curve because of changes in price -how sensitive changes in quantity supplied are to changes in price -how sensitive changes in quantity demanded are to changes in price

-how sensitive changes in quantity demanded are to changes in price

If a firm raises the price of its product, its total revenue will _____ -always increase. -increase only if demand is price inelastic. -increase only if demand is price elastic. -remain constant regardless of the price elasticity of demand. -never increase.

-increase only if demand is price inelastic.

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the demand is _____ -elastic. -inelastic. -unit elastic. -perfectly elastic. -perfectly inelastic.

-inelastic.

If an increase in the price of a product from $100 to $200 per unit leads to a decrease in the quantity demanded from 10 to 8 units, then demand is _____ -elastic. -inelastic. -unit elastic. -zero. -perfectly elastic.

-inelastic.

If city officials expect that an increase in bus fares will raise mass transit revenues, they must think that the demand for bus travel is _____ -elastic. -unit elastic. -inelastic. -upward-sloping. -perfectly elastic.

-inelastic.

Wheat farmers in Kansas would benefit from a devastating crop failure in North Dakota (another major wheat-producing state) if the U.S. demand for wheat is _____ -inelastic. -elastic. -unit elastic. -downward sloping. -perfectly elastic.

-inelastic.

Demand is unit elastic whenever _____ -price elasticity has an absolute value of 1. -price elasticity has an absolute value greater than 1. -price elasticity has an absolute value less than 1. -price elasticity is negative. -consumers do not respond to a change in price.

-price elasticity has an absolute value of 1.>

If demand is unit elastic, a price reduction will _____ -increase revenues. -reduce revenues. -reduce total cost. -have no effect on revenues. -increase profits.

-reduce total cost.?

In economics, elasticity means _____ -responsiveness to price changes. -shifts in demand. -shifts in supply. -how many goods money can buy. -how corporations maximize their revenue.

-responsiveness to price changes.

The important aspect measured by elasticity is _____ -responsiveness. -happiness. -bonus. -profit.

-responsiveness.

Suppose consumers spent $42 million on Christmas trees last year, when the average tree cost was $30. This year they spend $42 million, when the average tree costs $25. Assume that everything else remains constant. This data suggests that _____ -consumers bought the same number of Christmas trees this year as last year. -the price of the Christmas trees stayed the same. -total revenue to tree producers rose this year. -the demand for trees is unit elastic. -the demand for trees is inelastic.

-the demand for trees is unit elastic.

Demand is inelastic if _____ -the percentage change in price is greater than the percentage change in quantity demanded. -the percentage change in price is less than the percentage change in quantity demanded. -the percentage change in price is equal to the percentage change in quantity demanded. -the absolute value of price elasticity is equal to 1. -the absolute value of price elasticity is greater than 1.

-the percentage change in price is greater than the percentage change in quantity demanded.

The price elasticity of demand is calculated as _____ -the percentage change in quantity demanded divided by the percentage change in price. -the percentage change in price divided by the percentage change in quantity demanded. -the absolute change in quantity demanded divided by the absolute change in price. -the absolute change in price divided by the absolute change in quantity demanded. price multiplied by quantity demanded at that price

-the percentage change in quantity demanded divided by the percentage change in price.

The price elasticity of demand is defined as _____ -the percentage change in price divided by the percentage change in quantity demanded. -the percentage change in quantity demanded divided by the percentage change in price. the change in quantity demanded divided by the change in price. the change in price divided by the change in quantity demanded.

-the percentage change in quantity demanded divided by the percentage change in price.

Which of the following determines a firm's revenue when it changes the price of its product? -the firm's cost function -the elasticity of the firm's total product curve -the plant size used by the firm in the long run -the price elasticity of demand for the firm's product -the price elasticity of supply

-the price elasticity of demand for the firm's product?

Unit-elastic demand occurs when _____ -a one-unit increase in price leads to a one-unit decrease in quantity demanded. -a 1 percent increase in price leads to a one-unit decrease in quantity demanded. -the price elasticity of demand is negative. -the price elasticity of demand is exactly zero. -the price elasticity of demand is exactly 1.

-the price elasticity of demand is exactly 1.

Which of the following is assumed to be constant while calculating the price elasticity of demand? -the price of the product itself -the quantity demanded of the product -total revenue received from the -sale of the product -the prices of all other products -the cost of production

-the prices of all other products

Elasticity measures _____ -the ability of a firm to introduce new products. -the strength of an economy's tendency to recover from recession. -the responsiveness of decision makers to changes in price, income, and other variables. -the profitability of investment in an industry. -the long-run price trends in an economy.

-the responsiveness of decision makers to changes in price, income, and other variables.

The price elasticity of demand for milk when quantity is measured in gallons will be _____ the price elasticity when quantity is measured in quarts. -the same as -four times -one-fourth of -two times -less than

-the same as

The price elasticity of demand helps determine the effect of price changes on a firm's _____ -property tax. -profit. -total output. -total revenue. -total cost.

-total revenue.

Table 5.2 If the price elasticity of demand is −0.5, then a _____ -1 percent decrease in quantity demanded leads to a 0.5 percent decrease in price. -1 percent decrease in price leads to a 0.5 percent increase in quantity demanded. -50 percent decrease in price leads to a 1 percent increase in quantity demanded. -50 percent decrease in price leads to a 100 percent increase in quantity demanded. -50 percent decrease in quantity demanded leads to a 1 percent decrease in price.

not -50 percent decrease in quantity demanded leads to a 1 percent decrease in price.

Table 5.1 Quantity Demanded | Price 10 | $50 20 | $40 30 | $30 40 | $20 50 | $10 Refer to Table 5.1. If price increases from $10 to $20, the price elasticity of demand is _____ -10. -5. -3.3. -3. -0.5.

not 0.5

Table 5.3 Refer to Table 5.3, which shows the change in the quantity demanded for Good A and Good B as a result of the change in their price. Use the information to calculate the price elasticity of demand for Good A. -−5/2 -−11/3 -−3/10 -−10/3 -−19/11

not 11/3