Question 1

Which of the following measures the price elasticity of demand?

Accepted Answer

A) A change in quantity divided by the change in income 
B) A percentage change in quantity divided by the percentage change in income 
C) A change in quantity divided by the change in price 
D) A percentage change in quantity divided by the percentage change in price 
A) A change in quantity divided by the change in income 
B) A percentage change in quantity divided by the percentage change in income 
C) A change in quantity divided by the change in price 
D) A percentage change in quantity divided by the percentage change in price D

Question 2

Which of the following would indicate an elasticity of demand for a necessity?

Accepted Answer

A) 0.5 
B) 1.5 
C) 2.5 
D) 5 
A) 0.5 
B) 1.5 
C) 2.5 
D) 5 A

Question 3

Reference: Use Figure 2 to answer questions 
Figure SEQ Figure 2: Demand for Widgets  
-If the price of a widget increases from $40 to $50 the absolute value of the price elasticity of demand is

Accepted Answer

A) .25 
B) .67 
C) 1.5 
D) 4 
A) .25 
B) .67 
C) 1.5 
D) 4 D

Question 4

Use Figure 1 to answer questions 
Figure SEQ Figure  1: Elasticities of Demand  
-Which of the graphs illustrate a relatively inelastic demand curve?

Accepted Answer

A) Graph A 
B) Graph B 
C) Graph C 
D) Graph D 
A) Graph A 
B) Graph B 
C) Graph C 
D) Graph D

Question 5

The ratio of the percentage change in quantity demanded to the percentage change in price is called

Accepted Answer

A) Price elasticity of demand 
B) Price elasticity of supply 
C) Income elasticity of demand 
D) Income elasticity of supply 
A) Price elasticity of demand 
B) Price elasticity of supply 
C) Income elasticity of demand 
D) Income elasticity of supply

Question 6

Use the following information to answer questions 
 $$\begin{array} { | c | c | } 
\hline & \begin{array} { c } 
\text { Price Elasticity of } \
\text { Dernard }
\end{array} \
\hline \text { Good A } & 4.5 \
\hline \text { Good B } & .45 \
\hline \text { Good C } & .45 \
\hline \text { Good D } & 45 \
\hline
\end{array}$$
-When price increases 7% quantity demanded decreases 5%.What is the price elasticity of demand?

Accepted Answer

A) 0.07 
B) 0.71 
C) 0.14 
D) 1.4 
A) 0.07 
B) 0.71 
C) 0.14 
D) 1.4

Question 7

If the price of a widget increases from $40 to $50 which of the following would be the expected result

Accepted Answer

A) Total revenue will increase 
B) Total revenue will decrease 
C) Total revenue will initially increase but return to previous level 
D) Total revenue will not be affected 
A) Total revenue will increase 
B) Total revenue will decrease 
C) Total revenue will initially increase but return to previous level 
D) Total revenue will not be affected

Question 8

Price elasticity of demand measures

Accepted Answer

A) The responsiveness of sellers to a change in income 
B) The responsiveness of consumers to a change in income 
C) The responsiveness of sellers to a change in price 
D) The responsiveness of consumers to a change in price 
A) The responsiveness of sellers to a change in income 
B) The responsiveness of consumers to a change in income 
C) The responsiveness of sellers to a change in price 
D) The responsiveness of consumers to a change in price

Question 9

If the price elasticity of demand is 4 than

Accepted Answer

A) A 1 percent change in the good's price will cause a 4 percent decrease in the quantity demanded of the good. 
B) A 1 percent change in the good's price will cause a 4 percent increase in the quantity demanded of the good. 
C) A 10 percent change in the good's price will cause a 4 percent decrease in the quantity demanded of the good 
D) A 10 percent change in the good's price will cause a 4 percent increase in the quantity demanded of the good. 
A) A 1 percent change in the good's price will cause a 4 percent decrease in the quantity demanded of the good. 
B) A 1 percent change in the good's price will cause a 4 percent increase in the quantity demanded of the good. 
C) A 10 percent change in the good's price will cause a 4 percent decrease in the quantity demanded of the good 
D) A 10 percent change in the good's price will cause a 4 percent increase in the quantity demanded of the good.

Question 10

Use the following information to answer questions 
 $$\begin{array} { | c | c | } 
\hline & \begin{array} { c } 
\text { Price Elasticity of } \
\text { Dernard }
\end{array} \
\hline \text { Good A } & 4.5 \
\hline \text { Good B } & .45 \
\hline \text { Good C } & .45 \
\hline \text { Good D } & 45 \
\hline
\end{array}$$
-Which of the above goods is the most responsive to changes in price?

Accepted Answer

A) Good A 
B) Good B 
C) Good C 
D) Good D 
A) Good A 
B) Good B 
C) Good C 
D) Good D

Question 11

All of the following are determinants of the price elasticity of demand except

Accepted Answer

A) The availability of substitutes 
B) The availability of normal goods 
C) Time 
D) The portion of income spent on the good 
A) The availability of substitutes 
B) The availability of normal goods 
C) Time 
D) The portion of income spent on the good

Question 12

Consider the following goods.Which of the following options provide the correct order of increasing elasticities? i.Salt
Ii)Wonder Bread
Iii)Bread

Accepted Answer

A) i, ii, iii 
B) ii, iii, i 
C) iii, ii, i 
D) They are the same 
A) i, ii, iii 
B) ii, iii, i 
C) iii, ii, i 
D) They are the same

Question 13

Explain why, when demand is elastic, a reduction in price will result in an increase in total revenue.

Accepted Answer

When demand is elastic, the percentage c

Question 14

Use Figure 1 to answer questions 
Figure SEQ Figure  1: Elasticities of Demand  
-Which of the graphs illustrate a perfectly elastic demand curve?

Accepted Answer

A) Graph A 
B) Graph B 
C) Graph C 
D) Graph D 
A) Graph A 
B) Graph B 
C) Graph C 
D) Graph D

Question 15

If the elasticity of demand is less than one, the price elasticity of demand is

Accepted Answer

A) Elastic 
B) Inelastic 
C) Unit elastic 
D) Unitary elastic 
A) Elastic 
B) Inelastic 
C) Unit elastic 
D) Unitary elastic

Question 16

When a given percent change in the price of a good causes a smaller percent change in the quantity demanded of the good, the good is considered

Accepted Answer

A) Elastic 
B) Inelastic 
C) Unit elastic 
D) Responsive 
A) Elastic 
B) Inelastic 
C) Unit elastic 
D) Responsive

Question 17

Understanding elasticity is important to understand how policy changes will impact

Accepted Answer

A) Election outcomes 
B) Political platforms 
C) Market outcomes 
D) Quantity supplied 
A) Election outcomes 
B) Political platforms 
C) Market outcomes 
D) Quantity supplied

Question 18

You are the owner of a quick stop shop across the street from a college specializing in a burger named after the school's mascot.It is a specialty in town and on game day is considered a staple for tailgaters.Which of the following would be an accurate assumption, given the above information, if you increase the price of the burger?

Accepted Answer

A) Total revenue will increase 
B) Total revenue will decrease 
C) There will be no change in total revenue 
D) Hot dog sales will increase 
A) Total revenue will increase 
B) Total revenue will decrease 
C) There will be no change in total revenue 
D) Hot dog sales will increase

Question 19

The price of a good increases by 4%.The total revenue would probably increase on all of the following except

Accepted Answer

A) Salt 
B) Gasoline 
C) Insulin for a diabetic 
D) A European vacation 
A) Salt 
B) Gasoline 
C) Insulin for a diabetic 
D) A European vacation

Question 20

The local city council wants to increase the tax on alcohol sales.The intent of the tax is to help raise tax revenue to supplement funds needed for a new elementary school.This tax would only be effective if the price elasticity of demand for alcohol is

Accepted Answer

A) Elastic 
B) Inelastic 
C) Unit 
D) Perfectly elastic 
A) Elastic 
B) Inelastic 
C) Unit 
D) Perfectly elastic

Exam 5: Elasticity

Which of the following measures the price elasticity of demand?

Which of the following would indicate an elasticity of demand for a necessity?

Reference: Use Figure 2 to answer questions Figure SEQ Figure 2: Demand for Widgets -If the price of a widget increases from $40 to $50 the absolute value of the price elasticity of demand is

Use Figure 1 to answer questions Figure SEQ Figure 1: Elasticities of Demand -Which of the graphs illustrate a relatively inelastic demand curve?

The ratio of the percentage change in quantity demanded to the percentage change in price is called

Use the following information to answer questions Price Elasticity of Dernard Good A 4.5 Good B .45 Good C .45 Good D 45 -When price increases 7% quantity demanded decreases 5%.What is the price elasticity of demand?

If the price of a widget increases from $40 to $50 which of the following would be the expected result

Price elasticity of demand measures

If the price elasticity of demand is 4 than

Use the following information to answer questions Price Elasticity of Dernard Good A 4.5 Good B .45 Good C .45 Good D 45 -Which of the above goods is the most responsive to changes in price?

All of the following are determinants of the price elasticity of demand except

Consider the following goods.Which of the following options provide the correct order of increasing elasticities? i.Salt Ii)Wonder Bread Iii)Bread

Explain why, when demand is elastic, a reduction in price will result in an increase in total revenue.

Use Figure 1 to answer questions Figure SEQ Figure 1: Elasticities of Demand -Which of the graphs illustrate a perfectly elastic demand curve?

If the elasticity of demand is less than one, the price elasticity of demand is

When a given percent change in the price of a good causes a smaller percent change in the quantity demanded of the good, the good is considered

Understanding elasticity is important to understand how policy changes will impact

The price of a good increases by 4%.The total revenue would probably increase on all of the following except

The local city council wants to increase the tax on alcohol sales.The intent of the tax is to help raise tax revenue to supplement funds needed for a new elementary school.This tax would only be effective if the price elasticity of demand for alcohol is

An Introduction to the Economic Way of Thinking

Production Possibilities

Demand Supply

Consumer Surplus, Producer Surplus, and Economic Efficiency

Measuring Economic Activity

Inflation and the Measurement of Prices

The Power and Limits of Markets

Wage Determination and Superstar Salaries

The Minimum Wage

International Trade of Goods

Immigration and the International Trade of Labor

Foreign Exchange and the International Trade of Money

Farm Policy

The Economics of Illegal Drugs

Pollution, the Environment, and Global Warming

The Economics of Education

Competition and Monopoly

The Economics of Labor Market Discrimination

Poverty and the Distribution of Income

The Economics of Health Care

Monetary Policy and the Federal Reserve

Fiscal Policy and the Federal Budget

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