Supply and Demand

Topics: Supply and demand, Price elasticity of demand, Consumer theory Pages: 42 (11797 words) Published: February 2, 2013
C h a p t e r

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4) A) B) C) D)

ELASTICITY

Price Elasticity of Demand
Topic: The Price Elasticity of Demand Skill: Conceptual

Topic: Calculating Elasticity Skill: Conceptual

1) The slope of a demand curve depends on A) the units used to measure price and the units used to measure quantity. B) the units used to measure price but not the units used to measure quantity. C) the units used to measure quantity but not the units used to measure price. D) neither the units used to measure price nor the units used to measure quantity. Answer: A Topic: The Price Elasticity of Demand Skill: Conceptual

When the quantity of coal is measured in kilograms instead of pounds, the demand for coal becomes more elastic. less elastic. neither more nor less elastic. undefined.

Answer: C Topic: Calculating Elasticity Skill: Recognition

2) The price elasticity of demand depends on A) the units used to measure price and the units used to measure quantity. B) the units used to measure price but not the units used to measure quantity. C) the units used to measure quantity but not the units used to measure price. D) neither the units used to measure price nor the units used to measure quantity. Answer: D Topic: The Price Elasticity of Demand Skill: Recognition

5) The price elasticity of demand equals A) the change in the price divided by the change in quantity demanded. B) the change in the quantity demanded divided by the change in price. C) the percentage change in the price divided by the percentage change in the quantity demanded. D) the percentage change in the quantity demanded divided by the percentage change in the price. Answer: D Topic: Calculating Elasticity Skill: Analytical

6)

3) The price elasticity of demand measures A) how often the price of a good changes. B) the slope of a budget curve. C) how sensitive the quantity demanded is to changes in demand. D) the responsiveness of the quantity demanded to changes in price. Answer: D

A) B) C) D)

If a rightward shift of the supply curve leads to a 6 percent decrease in the price and a 5 percent increase in the quantity demanded, the price elasticity of demand is 0.30. 0.60. 0.83. 1.20.

Answer: C

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CHAPTER 4

Topic: Calculating Elasticity Skill: Analytical

Topic: Calculating Elasticity Skill: Analytical

7)

A) B) C) D)

A 10 percent increase in the quantity of spinach demanded results from a 20 percent decline in its price. The price elasticity of demand for spinach is 0.5. 2.0. 10.0. 20.0.

11) A fall in the price of cabbage from $10.50 to $9.50 per bushel increases the quantity demanded from 18,800 to 21,200 bushels. The price elasticity of demand is A) 0.80. B) 1.20. C) 1.25. D) 8.00. Answer: B Topic: Calculating Elasticity Skill: Analytical

Answer: A Topic: Calculating Elasticity Skill: Analytical

8)

A) B) C) D)

A 20 percent increase in the quantity of pizza demanded results from a 10 percent decline in its price. The price elasticity of demand for pizza is 0.5. 2.0. 10.0. 20.0.

Answer: B Topic: Calculating Elasticity Skill: Analytical

12) Suppose that the quantity of root beer demanded declines from 103,000 gallons per week to 97,000 gallons per week as a consequence of a 10 percent increase in the price of root beer. The price elasticity of demand is A) 0.60. B) 1.40. C) 1.66. D) 6.00. Answer: A Topic: Calculating Elasticity Skill: Analytical

9)

A) B) C) D)

Suppose a rise in the price of peaches from $5.50 to $6.50 per bushel decreases the quantity demanded from 12,500 to 11,500 bushels. The price elasticity of demand is 0.5. 1.0. 2.0. 1000.0.

Answer: A Topic: Calculating Elasticity Skill: Analytical

13) The price elasticity of demand is 5.0 if a 10 percent increase in the price results in a ____ decrease in the quantity demanded. A) 2 percent B) 5 percent C) 10 percent D) 50 percent Answer: D Topic: Calculating Elasticity Skill: Analytical

10) A fall in the price of lemons from...
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