Micro econ

Elasticity is A)a measure of how much buyers and sellers respond to changes in market conditions. B)the study of how the allocation of resources affects economic well-being. C)the maximum amount that a buyer will pay for a good. D)the value of everything a seller must give up to produce a good.

A

Elasticity of demand is closely related to the slope of the demand curve. The less responsive buyers are to a change in price, the A)steeper the demand curve will be. B)flatter the demand curve will be. C)further to the right the demand curve will sit. D)closer to the vertical axis the demand curve will sit.

A

For a particular good, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good? A)There are many substitutes for this good. B)The good is a necessity. C)The market for the good is broadly defined. D)The relevant time horizon is short.

A

The price elasticity of demand measures the A)magnitude of the response in quantity demanded to a change in price. B)direction of the shift in the demand curve in response to a market event. C)size of the shortage created by the increase in demand. D)responsiveness of quantity demanded to a change in income.

A

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

D

When consumers face rising gasoline prices, they typically A)reduce their quantity demanded more in the long run than in the short run. B)reduce their quantity demanded more in the short run than in the long run. C)do not reduce their quantity demanded in the short run or the long run. D)increase their quantity demanded in the short run but reduce their quantity demanded in the long run.

A

Which of the following is likely to have the most price inelastic demand? A)chocolate B)Godiva chocolate C)Hershey's chocolate D)All three would have the same elasticity of demand because they are all related.

A

Income Quantity of Good Y Purchased $30,000 20 $40,000 10 Using the midpoint method, the income elasticity of demand for good Y is A)2.33, and good Y is a normal good. B)-2.33, and good Y is an inferior good. C)-0.43, and good Y is a normal good. D)-0.43, and good Y is an inferior good.

B

Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this good is A)inelastic and equal to 6. B)elastic and equal to 6. C)inelastic and equal to 0.17. D)elastic and equal to 0.17.

B

When the price of bubble gum is $0.50, the quantity demanded is 400 packs per day. When the price falls to $0.40, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for bubble gum is A)inelastic. B)elastic. C)unit elastic. D)perfectly inelastic.

B

Good Price Elasticity of Demand A 1.3 B 2.1 Which of the following is consistent with the elasticities given in this table? A)A is root beer, and B is carbonated beverages. B)A is bicycles, and B is mopeds. C)A is airline tickets in the short run, and B is airline tickets in the long run. D)A is gourmet coffee, and B is dentist's visits

C

If the price elasticity of demand for a good is 1.5, then a 3 percent decrease in price results in a A)0.5 percent increase in the quantity demanded. B)2 percent increase in the quantity demanded. C)4.5 percent increase in the quantity demanded. D)5 percent increase in the quantity demanded.

C

Last month, sellers of good Y took in $100 in total revenue on sales of 50 units of good Y. This month sellers of good Y raised their price and took in $120 in total revenue on sales of 40 units of good Y. At the same time, the price of good X stayed the same, but sales of good X increased from 20 units to 40 units. We can conclude that goods X and Y are A)substitutes, and have a cross-price elasticity of 0.60. B)complements, and have a cross-price elasticity of 0.60. C)substitutes, and have a cross-price elasticity of 1.67. D)complements, and have a cross-price elasticity of 1.67.

C

Suppose that Juan Carlos is filling out a survey that he received in the mail. The survey asks him what he would do if the price of his favorite toothpaste increased. Juan Carlos reports that he would switch to a different brand. The survey asks what he would do if the price of all toothpastes increased. Juan Carlos reports that he must use toothpaste, so he would have to adjust his spending elsewhere. These examples illustrate the importance of A)changes in total revenue in determining the price elasticity of demand. B)a necessity versus a luxury in determining the price elasticity of demand. C)the definition of a market in determining the price elasticity of demand. D)the time horizon in determining the price elasticity of demand.

C

As we move downward and to the right along a linear, downward-sloping demand curve, A)both slope and elasticity remain constant. B)slope changes but elasticity remains constant. C)both slope and elasticity change. D)slope remains constant but elasticity changes.

D

If the price elasticity of demand for a good is 10.0, then a 4 percent increase in price results in a A)0.4 percent decrease in the quantity demanded. B)2.5 percent decrease in the quantity demanded. C)4 percent decrease in the quantity demanded. D)40 percent decrease in the quantity demanded

D

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest? A)immediately after the price increase B)one month after the price increase C)three months after the price increase D)one year after the price increase

D

Suppose the price of potato chips decreases from $1.45 to $1.25 and, as a result, the quantity of potato chips demanded increases from 2,000 to 2,200. Using the midpoint method, the price elasticity of demand for potato chips in the given price range is A)2.00. B)1.55. C)1.00. D)0.64.

D

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 2. Which of the following events is consistent with a 0.1 percent increase in the price of the good? A)The quantity of the good demanded decreases from 250 to 150. B)The quantity of the good demanded decreases from 200 to 100. C)The quantity of the good demanded decreases by 0.05 percent. D)The quantity of the good demanded decreases by 0.2 percent.

D