Worksheet Elasticity Answer 1

Topics: Supply and demand, Price elasticity of demand, Elasticity Pages: 7 (1947 words) Published: January 24, 2015
Chapter 5 Elasticity and Its Application
Multiple Choice
Table 5-2
Price
Quantity
$100
0
$80
10
$60
20
$40
30
$20
40
$0
50
102.Refer to Table 5-2. Using the midpoint method, if the price falls from $80 to $60, the absolute value of the price elasticity of demand is a.
20.
b.
10.
c.
2.33.
d.
0.43.
ANS:CPTS:1DIF:2REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Midpoint method | Price elasticity of demand MSC:Analytical
103.Refer to Table 5-2. Using the midpoint method, if the price falls from $60 to $40, the absolute value of the price elasticity of demand is a.
0.4.
b.
1.
c.
4.
d.
20.
ANS:BPTS:1DIF:2REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Midpoint method | Price elasticity of demand MSC:Analytical
104.Refer to Table 5-2. Using the midpoint method, if the price falls from $40 to $20, the absolute value of the price elasticity of demand is a.
20.
b.
10.
c.
2.33.
d.
0.43.
ANS:DPTS:1DIF:2REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Midpoint method | Price elasticity of demand MSC:Analytical
105.Refer to Table 5-2. Using the midpoint method, if the price falls from $80 to $60, the price elasticity of demand is a.
zero.
b.
unit elastic.
c.
inelastic.
d.
elastic.
ANS:DPTS:1DIF:2REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Midpoint method | Price elasticity of demand MSC:Analytical
106.Refer to Table 5-2. Using the midpoint method, if the price falls from $60 to $40, the price elasticity of demand is a.
zero.
b.
inelastic.
c.
unit elastic.
d.
elastic.
ANS:CPTS:1DIF:2REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Midpoint method | Price elasticity of demand MSC:Analytical
107.Refer to Table 5-2. Using the midpoint method, if the price falls from $40 to $20, the price elasticity of demand is a.
zero.
b.
inelastic.
c.
unit elastic.
d.
elastic.
ANS:BPTS:1DIF:2REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Midpoint method | Price elasticity of demand MSC:Analytical

Figure 5-2

140.Refer to Figure 5-2. As price falls from Pa to Pb, which demand curve represents the most elastic demand? a.
D1
b.
D2
c.
D3
d.
All of the above are equally elastic.
ANS:APTS:1DIF:2REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Price elasticity of demand MSC:Applicative
141.Refer to Figure 5-2. As price falls from Pa to Pb, we could use the three demand curves to calculate three different values of the price elasticity of demand. Which of the three demand curves would produce the smallest elasticity? a.

D1
b.
D2
c.
D3
d.
All of the above are equally elastic.
ANS:CPTS:1DIF:2REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Price elasticity of demand MSC:Applicative

Figure 5-3

142.Refer to Figure 5-3. The demand curve representing the demand for a luxury good with several close substitutes is a.
A.
b.
B.
c.
C.
d.
D.
ANS:CPTS:1DIF:2REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Price elasticity of demand MSC:Applicative
143.Refer to Figure 5-3. Mark says he would buy one Mt. Dew per day regardless of the price. If this is true, then Mark's demand for Mt. Dew is represented by demand curve a.
A.
b.
B.
c.
C.
d.
D.
ANS:APTS:1DIF:3REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Perfectly inelastic demand MSC:Applicative
144.Refer to Figure 5-3. Which demand curve is perfectly elastic? a.
A
b.
B
c.
C
d.
D
ANS:DPTS:1DIF:1REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Perfectly elastic demand
MSC:Definitional
145.Refer to Figure 5-3. Which demand curve is perfectly inelastic? a.
A
b.
B
c.
C
d.
D
ANS:APTS:1DIF:1REF:5-1
NAT:AnalyticLOC:ElasticityTOP:Perfectly inelastic demand MSC:Definitional

147.When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand...
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