Microeconomics- Chapter 6 (2)

18. For a linear demand curve: A. elasticity is constant along the curve. B. elasticity is unity at every point on the curve. C. demand is elastic at low prices. D. demand is elastic at high prices.

D. demand is elastic at high prices.

29. If the price of hand calculators falls from $10 to $9 and, as a result, the quantity demanded increases from 100 to 125, then: A. demand is elastic. B. demand is inelastic. C. demand is of unit elasticity. D. not enough information is given to make a statement about elasticity.

A. demand is elastic.

14. The price elasticity of demand of a straight-line demand curve is: A. elastic in high-price ranges and inelastic in low-price ranges. B. elastic, but does not change at various points on the curve. C. inelastic, but does not change at various points on the curve. D. 1 at all points on the curve.

A. elastic in high-price ranges and inelastic in low-price ranges.

Price elasticity of demand is generally: A. greater in the long run than in the short run. B. greater in the short run than in the long run. C. the same in both the short run and the long run. D. greater for "necessities" than it is for "luxuries."

A. greater in the long run than in the short run.

17. The price elasticity of demand is generally: A. negative, but the minus sign is ignored. B. positive, but the plus sign is ignored. C. positive for normal goods and negative for inferior goods. D. positive because price and quantity demanded are inversely related.

A. negative, but the minus sign is ignored.

31. If quantity demanded is completely unresponsive to price changes, demand is: A. perfectly inelastic. B. perfectly elastic. C. relatively inelastic. D. relatively elastic.

A. perfectly inelastic.

76. The narrower the definition of a product: A. the larger the number of substitutes and the greater the price elasticity of demand. B. the smaller the number of substitutes and the greater the price elasticity of demand. C. the larger the number of substitutes and the smaller the price elasticity of demand. D. the smaller the number of substitutes and the smaller the price elasticity of demand.

A. the larger the number of substitutes and the greater the price elasticity of demand.

66. Which of the following is correct? A. If the demand for a product is inelastic, a change in price will cause total revenue to change in the opposite direction. B. If the demand for a product is inelastic, a change in price will cause total revenue to change in the same direction. C. If the demand for a product is inelastic, a change in price may cause total revenue to change in either the opposite or the same direction. D. The price elasticity coefficient applies to demand, but not to supply.

B. If the demand for a product is inelastic, a change in price will cause total revenue to change in the same direction.

16. If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will: A. decrease the amount demanded by more than 10 percent. B. increase the amount demanded by more than 10 percent. C. decrease the amount demanded by less than 10 percent. D. increase the amount demanded by less than 10 percent.

B. increase the amount demanded by more than 10 percent.

74. The elasticity of demand for a product is likely to be greater: A. if the product is a necessity, rather than a luxury good. B. the greater the amount of time over which buyers adjust to a price change. C. the smaller the proportion of one's income spent on the product. D. the smaller the number of substitute products available.

B. the greater the amount of time over which buyers adjust to a price change.

The more time consumers have to adjust to a change in price: A. the smaller will be the price elasticity of demand. B. the greater will be the price elasticity of demand. C. the more likely the product is a normal good. D. the more likely the product is an inferior good.

B. the greater will be the price elasticity of demand.

64. Which of the following is correct? A. If demand is elastic, an increase in price will increase total revenue. B. If demand is elastic, a decrease in price will decrease total revenue. C. If demand is elastic, a decrease in price will increase total revenue. D. If demand is inelastic, an increase in price will decrease total revenue.

C. If demand is elastic, a decrease in price will increase total revenue.

40. When the percentage change in price is greater than the resulting percentage change in quantity demanded: A. a decrease in price will increase total revenue. B. demand may be either elastic or inelastic. C. an increase in price will increase total revenue. D. demand is elastic.

C. an increase in price will increase total revenue.

13. Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business. Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time. We can expect that each successive week: A. demand will become more price elastic. B. price elasticity of demand will not change as price is lowered. C. demand will become less price elastic. D. the elasticity of supply will increase.

C. demand will become less price elastic.

30. A perfectly inelastic demand curve: A. has a price elasticity coefficient greater than unity. B. has a price elasticity coefficient of unity throughout. C. graphs as a line parallel to the vertical axis. D. graphs as a line parallel to the horizontal axis.

C. graphs as a line parallel to the vertical axis.

12. The price elasticity of demand for widgets is 0.80. Assuming no change in the demand curve for widgets, a 16 percent increase in sales implies a: A. 1 percent reduction in price. B. 12 percent reduction in price. C. 40 percent reduction in price. D. 20 percent reduction in price.

D. 20 percent reduction in price.

11. Most demand curves are relatively elastic in the upper-left portion because the original price: A. and quantity from which the percentage changes in price and quantity are calculated are both large. B. and quantity from which the percentage changes in price and quantity are calculated are both small. C. from which the percentage price change is calculated is small and the original quantity from which the percentage change in quantity is calculated is large. D. from which the percentage price change is calculated is large and the original quantity from which the percentage change in quantity is calculated is small.

D. from which the percentage price change is calculated is large and the original quantity from which the percentage change in quantity is calculated is small.

19. The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. Therefore demand for X in this price range: A. has declined. B. is of unit elasticity. C. is inelastic. D. is elastic.

D. is elastic.

15. A leftward shift in the supply curve of product X will increase equilibrium price to a greater extent the: A. more elastic the supply curve. B. larger the elasticity of demand coefficient. C. more elastic the demand for the product. D. more inelastic the demand for the product.

D. more inelastic the demand for the product.

24. The concept of price elasticity of demand measures: A. the slope of the demand curve. B. the number of buyers in a market. C. the extent to which the demand curve shifts as the result of a price decline. D. the sensitivity of consumer purchases to price changes.

D. the sensitivity of consumer purchases to price changes.