Pre-Chapter Questions 4: Chapter 4.Assignment

Which of the following goods has the highest price elasticity of demand? Multiple choice question. - coffee - green peas - tobacco - medical care

- coffee - green peas reason: Green peas have many substitutes, so the price elasticity of demand is relatively high. - tobacco - medical care

If the demand for first-class airline tickets is inelastic with respect to price, then if the price of first-class airline tickets increases, then total expenditure will _____. - increase - decrease - stay the same

- increase Reason: If demand is inelastic with respect to price, total expenditure will increase in response to a price increase. - decrease - stay the same

If the price of sofas goes up by 10 percent and the quantity of sofas demanded falls by 15 percent, then the total expenditure on sofas will Multiple choice question. - increase. - remain unchanged. - decrease.

- increase. - remain unchanged. - decrease. Reason: If the percentage increase in price is less than the percentage decrease in quantity demanded, then total expenditure will decrease.

If the price elasticity of demand is infinite, then demand is Multiple choice question. - perfectly inelastic. - unit elastic. - perfectly elastic.

- perfectly inelastic. - unit elastic. - perfectly elastic.

Price × quantity equals ________. Multiple select question. - seller's surplus - total expenditure - total revenue

- seller's surplus - total expenditure - total revenue

The price elasticity of demand is Multiple choice question. - the percentage change in quantity demanded that results from a one dollar change in price. - the change in quantity demanded divided by the change in price. - the change in quantity demanded that results from a 1 percent change in price. - the percentage change in quantity demanded that results from a 1 percent change in price.

- the percentage change in quantity demanded that results from a one dollar change in price. - the change in quantity demanded divided by the change in price. - the change in quantity demanded that results from a 1 percent change in price. - the percentage change in quantity demanded that results from a 1 percent change in price.

Given that there are many different kinds of cereal that people can buy, the price elasticity of demand for any particular brand of cereal is likely to be relatively _____. high or low

high reason: Demand will tend to be more elastic with respect to price for products for which close substitutes are readily available.

The formula for the price elasticity of demand is:

p/q x 1/slope