Elasticity Quiz PDF

Elasticity Quiz 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 much a. quantity demanded responds to a change in price. b. quantity demanded responds to a chan...

Elasticity Quiz 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 much a. quantity demanded responds to a change in price. b. quantity demanded responds to a change in income. c. price responds to a change in demand. d. demand responds to a change in supply. ____ 2. The demand for Werthers candy is likely a. elastic because candy is expensive relative to other snacks. b. elastic because there are many close substitutes for Werthers. c. elastic because Werthers are regarded as a necessity by many people. d. inelastic because it is usually eaten quickly, making the relevant time horizon short. ____ 3. A good will have a more inelastic demand, a. the greater the availability of close substitutes. b. the broader the definition of the market. c. the longer the period of time. d. the more it is regarded as a luxury. ____ 4. Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is a. 0. b. 1. c. 6. d. 36. ____ 5. If the price elasticity of demand for a good is 0.94, then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded? a. a 0.235 percent increase in the price of the good b. a 2.350 percent increase in the price of the good c. a 3.760 percent increase in the price of the good d. a 4.255 percent increase in the price of the good ____ 6. For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good? a. The relevant time horizon is short. b. The good is a necessity. c. The market for the good is broadly defined. d. There are many close substitutes for this good. Figure 5-2 ____ 7. Refer to Figure 5-2. The price elasticity of demand between point A and point B, using the midpoint method, is a. 1. b. 1.5. c. 2. d. 2.5. ____ 8. When the local used bookstore prices economics books at $15.00 each, they generally sell 70 books per month. If they lower the price to $7.00, sales increase to 90 books per month. Given this information, we know that the price elasticity of demand for economics books is about a. 2.91, and an increase in price from $7.00 to $15.00 results in an increase in total revenue. b. 2.91, and an increase in price from $7.00 to $15.00 results in a decrease in total revenue. c. 0.34, and an increase in price from $7.00 to $15.00 results in an increase in total revenue. d. 0.34, and an increase in price from $7.00 to $15.00 results in a decrease in total revenue. ____ 9. If a 6 percent increase in income results in a 10 percent increase in the quantity demanded of pizza, then the income elasticity of demand for pizza is a. negative and therefore pizza is an normal good. b. negative and therefore pizza is a inferior good. c. positive and therefore pizza is an inferior good. d. positive and therefore pizza is a normal good. ____ 10. The cross-price elasticity of demand can tell us whether goods are a. normal or inferior. b. elastic or inelastic. c. luxuries or necessities. d. complements or substitutes. Elasticity Quiz Answer Section MULTIPLE CHOICE 1. ANS: A DIF: 1 REF: 5-1 TOP: Price elasticity of demand MSC: Definitional 2. ANS: B DIF: 2 REF: 5-1 TOP: Price elasticity of demand MSC: Interpretive 3. ANS: B DIF: 2 REF: 5-1 TOP: Price elasticity of demand MSC: Interpretive 4. ANS: B DIF: 2 REF: 5-1 TOP: Price elasticity of demand MSC: Applicative 5. ANS: D DIF: 2 REF: 5-1 TOP: Price elasticity of demand MSC: Applicative 6. ANS: D DIF: 3 REF: 5-1 TOP: Price elasticity of demand MSC: Analytical 7. ANS: D DIF: 2 REF: 5-1 TOP: Price elasticity of demand MSC: Applicative 8. ANS: C DIF: 2 REF: 5-1 TOP: Price elasticity of demand, Total revenue MSC: Applicative 9. ANS: D DIF: 2 REF: 5-1 TOP: Income elasticity of demand MSC: Applicative 10. ANS: D DIF: 2 REF: 5-1 TOP: Cross-price elasticity of demand MSC: Interpretive