elasticity practic quiz (2)

7/23/2019 Elasticity Practic Quiz (2)

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Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question.

____ 1. The price elasticity of demand measures how responsivea. buyers are to a change in income.b. sellers are to a change in price.c. buyers are to a change in price.d. sellers are to a change in buyers' incomes.

____ 2. Demand is said to be elastic ifa. the price of the good responds substantially to changes in demand.b. demand shifts substantially when the price of the good changes.c. buyers do not respond much to changes in the price of the good.d. the quantity demanded responds substantially to changes in the price of the good.

____ 3. hen quantity demanded responds substantially to changes in price! demand is said to bea. elastic.

b. inelastic.c. unit elastic.d. perfectly elastic.

____ ". The elasticity of demand for lu#uries tends to bea. greater than 1.b. less than 1.c. equal to 1.d. equal to $.

____ %. The midpoint method is used to compute elasticity because ita. automatically computes a positive number instead of a negative number.b. uses the same equation that is used to compute slope.c. gives the same answer regardless of the direction of change.d. automatically rounds quantities to the nearest whole unit.

____ &. Demand is unit elastic if elasticity isa. less than 1.b. greater than 1.c. equal to 1.d. equal to $.

Figure 5-1


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____ . Refer to Figure 5-1. The section of the demand curve labeled ( represents thea. elastic section of the demand curve.b. perfectly elastic section of the demand curve.c. unit elastic section of the demand curve.d. inelastic section of the demand curve.

Figure 5-2

____ ). Refer to Figure 5-2. The elasticity of demand from point * to point +! using the midpoint method would bea. 1.b. 1.%.c. 2.d. 2.%.

____ ,. Refer to Figure 5-2. The elasticity of demand from point + to point (! using the midpoint method would bea. $.%.b. $.%.

c. 1.$.d. 1.3.

____ 1$. hen the price of -ittens was 2% each! the pet shop sold 2$ per month. hen they raised the price to 3%each! they sold 1" per month. The elasticity of demand for -ittens would bea. 1.&&.b. 1.$&.c. $.,".d. $.&$.

____ 11. hen the local used boo-store prices economics boo-s at 1%.$$ each! they generally sell $ per month. /fthey lower the price to .$$ each they sell ,$. 0iven this! we -now that the elasticity of demand foreconomics boo-s isa. 2.,1! so this store should lower price to raise total revenue.

b. 2.,1! so this store should raise price to raise total revenue.c. $.3"! so this store should lower price to raise total revenue.d. $.3"! so this store should raise price to raise total revenue.

____ 12. The flatter the demand curve through a given point! thea. greater the price elasticity of demand.b. smaller the price elasticity of demand.c. closer the price elasticity of demand will be to the slope of the curve.d. more equal the price elasticity of demand will be to the slope of the curve.


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____ 13. The smaller the price elasticity of demand thea. closer the price elasticity of demand will be to the slope of the curve.b. flatter the demand curve will be through a given point.c. steeper the demand curve will be through a given point.d. more equal the price elasticity of demand will be to the slope of the curve.

____ 1". * perfectly inelastic demand curve will bea. negatively sloped! because buyers decrease their purchases when the price rises.b. vertical! because buyers purchase the same amount whether the price rises or falls.c. positively sloped! because buyers respond by increasing their purchases when price rises.d. horiontal! because buyers increase their purchases by huge amounts with slight changes in

price.

____ 1%. /n any mar-et! total revenue is pricea. divided by the price elasticity of demand.b. multiplied by quantity.c. plus quantity.d. multiplied by quantity minus the costs of production.

____ 1&. hen demand is inelastic! a decrease in price will cause

a. an increase in total revenue.b. a decrease in total revenue.c. no change in total revenue.d. There is insufficient information to answer this question.

Figure 5-6

____ 1. Refer to Figure 5-6. /f price increases from 1$ to 1%! total revenue willa. increase by 2$! so demand must be inelastic.b. increase by %! so demand must be inelastic.c. decrease by 2$! so demand must be elastic.d. decrease by 1$! so demand must be elastic.

Figure 5-7


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____ 1). Refer to Figure 5-7. Total revenue at 2 would be represented by areas4a. + 5 D.b. * 5 +.c. ( 5 D.

d. D.____ 1,. 6or a horiontal demand curve! slope

a. is undefined and elasticity equals $.b. equals $ and elasticity is undefined.c. and elasticity are both undefined.d. and elasticity are both equal to $.

____ 2$. *long a linear demand curve! slopea. and elasticity are both constant.b. changes but elasticity is constant.c. and elasticity both change.d. is constant but elasticity changes.

____ 21. 7oving down a linear demand curve we -now that elasticity getsa. smaller! then larger.b. larger.c. smaller.d. larger! then smaller.

____ 22. 7oving up a linear demand curve! we -now that total revenuea. increases! then decreases.b. decreases! then increases.c. increases.d. decreases.

____ 23. hich pair of products lists the more elastic product first8a. corn oil and motor oil

b. eggs and butterc. erasers and 9nic-ers candy barsd. car tires and diet (o-e

____ 2". hether a good is a lu#ury or necessity depends ona. the price of the good.b. the preferences of the buyer.c. the intrinsic properties of the good.d. how scarce the good is.


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____ 2%. :our younger sister needs %$ to buy a new bi-e. 9he has opened a lemonade stand to ma-e the money sheneeds. 9he currently is charging 2% cents per cup! but wants to ad;ust her price to earn the money faster. /f you-now that the demand for lemonade is elastic! what is your advice to her8a.

elasticity practic quiz (2)

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