HCM 402 Module 5 Practice Quiz

Which is a correct explanation for changes in revenue based upon unitary elastic demand? % change in Qd > % change in P % change in Qd = % change in P % change in Qd < % change in P % change in Qd < % change in P

% change in Qd = % change in P

Which types of elasticity will be represented by a curved line? Perfect inelasticity Zero elasticity Constant unitary elasticity Infinite elasticity

Constant unitary elasticity A demand curve with constant unitary elasticity will be a curved line. Perfect inelasticity is represented by a straight line.

Constant unitary elasticity

Constant unitary elasticity, in either a supply or demand curve, occurs when a price change of 1% results in a quantity change of 1%.

Although perfectly elastic supply curves are unrealistic, some goods have highly elastic supply curves. Which is an example of a good with a highly elastic supply curve? Gasoline Diamond rings Custom hand-made furniture Donuts

Donuts Correct. Goods with readily available inputs and whose production can be easily expanded will feature highly elastic supply curves.

Which of the examples are inelastic? Restaurant meals Gasoline Housing Personal computers and tablets Beer

Gasoline Housing

Which is true about tax incidence? The tax burden is equally shared by consumers and sellers. If demand is more inelastic than supply, sellers bear much of the tax burden. If demand is more inelastic than supply, consumers bear much of the tax burden. If supply is more inelastic than demand, consumers bear much of the tax burden.

If demand is more inelastic than supply, consumers bear much of the tax burden, but if supply is more inelastic than demand, sellers bear much of the tax burden.

The supplier of a computer game is willing to supply 2,500 units at $50 each, but is willing to supply 3,500 units at $60. Calculate the Price Elasticity of Supply rounded to two decimal places. Which statements are correct? If the price increases 10%, supply will decrease 18.3%. If the price increases 10%, supply will increase 18.3%. The demand is inelastic. The supply is elastic. If the price increases 10%, supply will increase 10%.

If the price increases 10%, supply will increase 18.3%. Correct. The elasticity of supply is 1.83; therefore, if the price increases 10%, supply will increase 18.3%. ALSO The supply is elastic. Correct. The elasticity of supply is 1.83; therefore, supply is elastic.

Which statement about the elasticity of savings is true? If the supply curve for financial capital is highly elastic, then a percentage increase in the return to savings will cause only a small increase in the quantity of savings. If the supply curve for financial capital is highly inelastic, then a percentage increase in the return to savings will not affect the quantity of savings. If the supply curve for financial capital is highly inelastic, then a percentage increase in the return to savings will cause only a small increase in the quantity of savings. If the supply curve for financial capital is highly inelastic, then a percentage increase in the return to savings will cause a higher increase in the quantity of savings.

If the supply curve for financial capital is highly inelastic, then a percentage increase in the return to savings will cause only a small increase in the quantity of savings.

Infinite elasticity

Infinite elasticity, or perfect elasticity, refers to the extreme case in which either the quantity demanded (Qd) or supplied (Qs) changes by an infinite amount in response to any change in price at all

Which statements about cross-price elasticity of demand are true? Both substitute goods and complement goods have negative cross-price elasticities of demand. Complement goods have negative cross-price elasticities of demand. Both substitute goods and complement goods have positive cross-price elasticities of demand Substitute goods have negative cross-price elasticities of demand. Substitute goods have positive cross-price elasticities of demand. Complement goods have positive cross-price elasticities of demand.

Substitute goods have positive cross-price elasticities of demand, and complement goods have negative cross-price elasticities of demand.

The price of a new computer game has demand of 3,000 units at $50 and 2,500 units at $60. Calculate the Price Elasticity of Demand rounded to two decimal places. Which statements are correct? If the price decreases 10%, demand will decrease 10%. The demand is inelastic. If the price increases 10%, demand will decrease 10%. The demand is unitary elastic. If the price increases 10%, demand will increase 10%.

The demand is unitary elastic. ALSO If the price increases 10%, demand will decrease 10% The elasticity of demand is 1.0; therefore, demand is unitary elastic.

Elastic demand

The elasticity is greater than one, indicating a high responsiveness to changes in price.

Price elasticity of supply

The percentage change in quantity supplied divided by the percentage change in price

Price elasticity of demand

The percentage change in the quantity demanded of a good or service divided by the percentage change in the price

Price elasticity

The ratio between the percentage change in the quantity demanded (Qd) or supplied (Qs), and the corresponding percent change in price

Which is true about the wage elasticity of the labor market? The percentage change in wages divided by the percentage change in hours determines the shape of the labor supply curve. The wage elasticity of labor supply for teenage workers is generally thought to be fairly elastic. When wages move up or down by a certain percentage amount, the quantity of hours that adults in their prime working years are willing to supply changes by a greater percentage amount. The wage elasticity of labor supply for adult workers in their 30s and 40s is thought to be fairly elastic.

The wage elasticity of labor supply for teenage workers is generally thought to be fairly elastic. The percentage change in hours divided by the percentage change in wages determines the shape of the labor supply curve. When wages move up or down by a certain percentage amount, the quantity of hours that adults in their prime working years are willing to supply changes by a lesser percentage amount.

Perfect elasticity

This is the same as perfect elasticity

Zero elasticity

Zero elasticity, or perfect inelasticity, refers to the extreme case in which a percentage change in price, no matter how large, results in zero change in quantity.