Exam 5: Price Elasticity of Demand

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then according to the averaging equation, the value of price elasticity of demand in absolute terms is:

Exhibit 5-1  Demand curves In Exhibit 5-1, between points a and b, the price elasticity of demand measures:

Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption by 10 percent. If the price elasticity of demand for water is 0.25, by how much would you have to raise the price of water?

Sally is an average shopper, with average income. When she is in the store she buys a few items which cost more than $20, several items which cost between $5 and $20, and many items which cost less than $1. The price elasticity of Sally's demand for these goods most likely ____.

If a 10 percent price increase causes the quantity demanded for a good to decrease by 10 percent, demand is unitary elastic.

A perfectly elastic demand curve has an elasticity coefficient of:

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then demand is:

Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicycles is:

Suppose the quantity demanded of steak is 200 million pounds per year when the price is $6 per pound and 400 million pounds per year when the price is $2 per pound. The price elasticity of demand for steak over this range is:

The price elasticity of demand for a particular good is influenced by which of the following factors?

Within different price ranges along a linear demand curve, elasticities are:

Which of the following statements is true ?

Exhibit 5-5  Demand curve for computers In Exhibit 5-5, the total revenue at point E on the demand curve equals:

Dana is an art historian who needs to travel to Italy to do research. Art historians usually don't have a lot of money, and therefore are very sensitive to price changes. Dana's funding agency pays her a fixed amount to travel. At current exchange rates, Dana can stay in Italy for 35 days. If the exchange rate improves by 10 percent, she can stay for 40 days. What is Dana's price elasticity of demand for days spent in Italy?

A horizontal demand curve indicates perfectly elastic demand.

Which of the following goods is likely to have the most elastic demand curve?

If the price elasticity of demand coefficient equals 2 then:

Demand sensitivity depends on all of the following except:

A demand curve that has constant price elasticity of demand coefficient equals to 1 at all points is a(n):

If the price elasticity of demand is elastic, then: