Question

1.Price elasticity of demand is defined as:

Multiple Choice

a.the slope of the demand curve.

b.the slope of the demand curve divided by the price.

c.the percentage change in price divided by the percentage change in quantity demanded.

d.the percentage change in quantity demanded divided by the percentage change in price.

2. The Midpoint Method for Elasticity uses which of the following?

Multiple Choice

a.Average percentage change in price only

b.Average percentage change in quantity only

c.Average percentage change in both price and quantity

d.Average initial values for both price and quantity

3. Jack Roper’s Barber Shop knows that a 2 percent increase in the price of their haircuts results in a 6 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Jack Roper’s Barber Shop?

Multiple Choice

a.0.15

b.3.0

c.0.10

d.0.05

4. Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo’s demand curve?

Multiple Choice

a.0.235

b.2.00

c.4.25

d.6.33

5. Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo’s demand curve?

Multiple Choice

a.0.235

b.2.00

c.4.25

d.6.33

6. Suppose that Mimi plays golf 5 times per month when the price is $40 and 4 times per month when the price is $50. What is the price elasticity of Mimi’s demand curve?

Multiple Choice

a.0.1

b.0.8

c.10.0

d.1.0

7. Suppose that Mimi plays golf 5 times per month when the price is $40 and 4 times per month when the price is $50. What is the price elasticity of Mimi’s demand curve?

Multiple Choice

a.0.1

b.0.8

c.10.0

d.1.0

8. Supply is said to be ______ when the quantity supplied is very responsive to changes in price.

Multiple Choice

a.elastic

b.inelastic

c.unit elastic

d.independent

9.When price increase from $43 to $49, quantity supplied increases from 220 units to 240 units. The price elasticity of supply in this price range is (use the Midpoint Formula):

Multiple Choice

a.0.3

b.0.67

c.1.5

d.3.33

10. When any change in price results in an infinite change in quantity demanded:

Multiple Choice

a.price elasticity of supply is zero.

b.demand is perfectly elastic.

c.demand is perfectly inelastic.

d.price elasticity of supply is infinite.

Answer #1

1.

Since the elasticity of demand can be defined as the measurement of the degree of the responsiveness of the quantity demand due to the change in the price level

Ed = % change in the quantity demand of good X/ % change in the price of good X

Hence option d is the correct answer.

2.

Midpoint formula of price elasticity of demand

Ed= [(Q2-Q1)/Q1] / [P2-P1)/P1]

It means elasticity of demand is the ratio of percentage change in the quantity demand and percentage change in the price.

Hence option c is the correct answer.

3.

Ed=(-6%)/2%

=-3.0

The negative sign only represent the negative relationship between price and quantity demanded.

Hence option b is the correct answer.

4.

P1=19

Q1=1

P2=15

Q2=3

Ed=[(Q2-Q1)/(Q2+Q1)/2] / [(P2-P1)/(P2+P1)/2]

=[(3-1)/(3+1)/2]/ [(15-19)/(19+15)/2)]

=(2/2 ) / (-4/17)

=1/-0.2352

=-4.25

Hence option c is the correct answer.

5. Suppose that Bobo purchases 1 pizza per month when the price
is $19 and 3 pizzas per month when the price is $15. What is the
price elasticity of Bobo’s demand curve?
Multiple Choice
a.0.235
b.2.00
c.4.25
d.6.33
6. Suppose that Mimi plays golf 5 times per month when the price
is $40 and 4 times per month when the price is $50. What is the
price elasticity of Mimi’s demand curve?
Multiple Choice
a.0.1
b.0.8
c.10.0
d.1.0
7....

The price elasticity of demand is a measure of
A.the shift in the demand curve when price changes
B.the demand for a product holding price constant
C. the quantity demanded at a given price
D. the responsiveness of the quantity demanded to price
changes

1-As we move up the demand curve, the price elasticity of demand
* A) increases B) decreases C) becomes unitary D) does not
change
2-If the price of lemonade increases relative to the price of
grape juice, the demand for: * A) grape juice will decrease. B)
grape juice will increase. C) lemonade will decrease. D) lemonade
will increase.
3-An increase in price will result in no change in total revenue
if: * A) the percentage change in price is...

Cross-price elasticity of demand is calculated as
the
total percentage change in quantity demanded divided by the total
percentage change in price.
percentage change in the price of good 1 divided by the percentage
change in the price of good 2.
percentage change in quantity demanded divided by the percentage
change in income.
percentage change in quantity demanded of good 1 divided by the
percentage change in the price of good 2.

(60)A perfectly inelastic demand curve has an elasticity
coefficient of:
(a)1
(b)0.25
(c)∞
(d)None of the above
Akal mn wahed
Extra Credit Questions-Optional
(61)If the percentage change in the quantity supplied of
a good is less than the percentage change in price, price
elasticity of supply is:
(a)Inelastic
(b)Perfectly inelastic
(c)Elastic
(d)Unitary elastic
(62)If the percentage change in the quantity demanded of
a good is equal to the percentage change in price, price elasticity
of demand is:
(a)Inelastic
(b)Perfectly inelastic...

The cross-price elasticity of demand measures the
absolute change in the quantity demanded of one good divided by
the absolute change in the price of another good.
percentage change in the price of one good divided by the
percentage change in the quantity demanded of another good.
percentage change in the quantity demanded of one good in one
location divided by the price of the same good in another
location.
percentage change in the quantity demanded of one good divided...

12) When quantity supplied equals quantity demanded:
Multiple Choice
a)the market forces push the economy to produce more.
b)equilibrium is reached.
c)the market forces push the economy to produce less.
d)the market forces cease to function.
13)Consider a market that is in equilibrium. If it experiences
both an increase in demand and an increase in supply, what can be
said of the new equilibrium? The equilibrium:
Multiple Choice
a)quantity will definitely rise, while the equilibrium price
cannot be predicted.
b)price...

1. What is the numerical value for the price elasticity of
demand if a price change causes no change in quantity
demanded?________ What is the numerical value for elasticity of
demand if a price change causes no change in total revenue?________
What is the elasticity of demand for a horizontal demand
curve?________ What is the elasticity of demand if a price increase
leads to an increase in total revenue? elastic /
inelastic. What is the numerical value for the elasticity...

The difference between price elasticity of demand and income
elasticity of demand is that
A. income elasticity of demand examines how an individual's
income changes when prices change and the price elasticity of
demand examines how quantity demand changes when price changes.
B. income elasticity measures the responsiveness of income to
changes in supply while price elasticity of demand measures the
responsiveness of demand to a change in price.
C. income elasticity refers to a horizontal shift of the demand...

Demand is inelastic if _____ Select one: a. the absolute value
of price elasticity is equal to 1. b. the percentage change in
price is greater than the percentage change in quantity demanded.
c. the absolute value of price elasticity is greater than 1. d. the
percentage change in price is less than the percentage change in
quantity demanded. e. the percentage change in price is equal to
the percentage change in quantity demanded.

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