Deck 5: Elasticity: Measuring Responsiveness

Question 1

Mary loves avocados and must consume avocados every week, regardless of the price. Which of the following must be true?

A)Mary has an inelastic demand for avocados.
B)Avocados are in large supply in the market.
C)Mary has an elastic demand for avocados.
D)All consumers in the market have a high demand for avocados.

Answer 1

A

Question 2

A measure of how responsive buyers are to price changes is the:

A)price elasticity of demand.
B)price elasticity of supply.
C)cross-price elasticity of demand.
D)income elasticity of demand.

Answer 2

A

Question 3

Price elasticity of demand measures how responsive _____ are to _____ changes.

A)buyers; quantity
B)buyers; price
C)buyers; income
D)sellers; quantity

Answer 3

B

Question 4

Price elasticity of demand is calculated by dividing the _____ by the _____.

A)percent change in price; percent change in quantity demanded
B)percent change in price; percent change in quantity supplied
C)percent change in quantity demanded; percent change in income
D)percent change in quantity demanded; percent change in price

Question 5

Lyft cuts the price of a ride in New York City by 20%. Thereafter, the quantity of rides demanded rises by 25%. What is the absolute value of the price elasticity of demand for Lyft rides?

A)0.8
B)-0.8
C)1.25
D)-1.25

Question 6

Lyft cuts the price of a ride in New York City by 10%. Thereafter, the quantity of rides demanded rises by 25%. What is the absolute value of the price elasticity of demand for Lyft rides?

A)0.4
B)-0.4
C)2.5
D)-2.5

Question 7

Uber cuts the price of a ride in Los Angeles by 15%. Thereafter, the quantity of rides demanded rises by 45%. What is the absolute value of the price elasticity of demand for Uber rides?

A)0.33
B)-0.33
C)3
D)-3

Question 8

The price of milk at the local grocery store is cut by 25%. In response to this price cut, the quantity of milk demanded increases by 10%. What is the absolute value of the price elasticity of demand for milk?

A)2.5
B)-2.5
C)0.4
D)-0.4

Question 9

The price of milk at the local grocery store is cut by 15%, and the quantity of milk demanded increases by 10% in response. What is the absolute value of the price elasticity of demand for milk?

A)1.5
B)-1.5
C)0.67
D)-0.67

Question 10

The price of milk at the local grocery store is cut by 10%. The quantity of milk demanded increases by 5% in response to this price cut. What is the absolute value of the price elasticity of demand for milk?

A)2
B)-2
C)0.5
D)-0.5

Question 11

The price of a loaf of sourdough bread falls from $2 to $1. In response to this price change, the quantity demanded for sourdough bread increases by 30%. What is the absolute value of the price elasticity of demand for sourdough bread?

A)1.67
B)-1.67
C)0.6
D)-0.6

Question 12

The price of a car wash falls from $10 to $9. In response to this price change, the quantity demanded for car washes increases by 20%. What is the absolute value of the price elasticity of demand for car washes?

A)2
B)-2
C)0.5
D)-0.5

Question 13

The price of a dozen eggs falls from $2.50 to $1.50. In response to this price change, the quantity demanded for eggs increases by 10%. What is the absolute value of the price elasticity of demand for eggs?

A)4
B)-4
C)0.25
D)-0.25

Question 14

The price of chicken breast rises from $3.50 per pound to $4.25 per pound. In response to this price change, the quantity demanded for chicken breast falls by 30%. What is the absolute value of the price elasticity of demand for chicken breast?

A)0.83
B)-0.83
C)1.4
D)-1.4

Question 15

The price of turkey breast rises from $3.00 per pound to $3.60 per pound. In response to this price change, the quantity demanded for turkey breast falls by 40%. What is the absolute value of the price elasticity of demand for turkey breast?

A)0.5
B)-0.5
C)2
D)-2

Question 16

The price of cheddar cheese increases from $2.50 per pound and is now $3.50 per pound. In response to this price change, the quantity demanded for cheddar cheese falls by 50%. What is the absolute value of the price elasticity of demand for cheddar cheese?

A)0.8
B)-0.8
C)1.25
D)-1.25

Question 17

When the absolute value of the price elasticity of demand is greater than 1, demand is:

A)elastic.
B)inelastic.
C)unit elastic.
D)perfectly inelastic.

Question 18

When the absolute value of the price elasticity of demand is infinite, demand is:

A)elastic.
B)inelastic.
C)perfectly elastic.
D)perfectly inelastic.

Question 19

When the absolute value of the price elasticity of demand is zero, demand is:

A)elastic.
B)inelastic.
C)perfectly elastic.
D)perfectly inelastic.

Question 20

Uber cuts the price of a ride in New York City by 20%, and the quantity of rides demanded rises by 40%. The absolute value of the price elasticity of demand for Uber rides is _____, and the price elasticity of demand for Uber rides is _____.

A)0.5; elastic
B)0.5; inelastic
C)2; elastic
D)2; inelastic

Question 21

Uber increases the price of a ride in New York City by 10%, and the quantity of rides demanded falls by 30%. The absolute value of the price elasticity of demand for Uber rides is _____, and the price elasticity of demand is _____.

A)0.33; elastic
B)0.33; inelastic
C)3; elastic
D)3; inelastic

Question 22

The price of milk at the local grocery store rises by 25%, and the quantity of milk demanded falls by 10%. The absolute value of the price elasticity of demand for milk is _____, and demand is _____.

A)2.5; elastic
B)2.5; inelastic
C)0.4; elastic
D)0.4; inelastic

Question 23

The price of milk at the local grocery store is cut by 15%. In response to the price cut, the quantity of milk demanded falls by 5%. The absolute value of the price elasticity of demand for milk is _____, and the price elasticity of demand is _____.

A)3; elastic
B)3; inelastic
C)0.33; elastic
D)0.33; inelastic

Question 24

The price of a dozen eggs falls from $2.50 to $1.50. In response to the price change, quantity demanded for eggs increases by 30%. The absolute value of the price elasticity of demand for eggs is _____, and the price elasticity of demand is _____.

A)1.33; elastic
B)1.33; inelastic
C)0.75; elastic
D)0.75; inelastic

Question 25

The price of a gallon of milk rises from $2 to $2.60. In response to this price change, the quantity demanded for milk falls by 5%. The absolute value of the price elasticity of demand for milk is _____, and the price elasticity of demand is _____.

A)6; elastic
B)6; inelastic
C)0.17; elastic
D)0.17; inelastic

Question 26

The price of chicken breast rises from $3.00 to $3.60 per pound. In response to the price change, the demand for chicken breast falls by 25%. The absolute value of the price elasticity of demand for chicken breast is _____, and the price elasticity of demand is _____.

A)0.8; elastic
B)0.8; inelastic
C)1.25; elastic
D)1.25; inelastic

Question 27

The price of chicken breast rises from $3.30 per pound to $3.63 per pound. In response to this price change, the quantity demanded for chicken breast falls by 40%. The absolute value of the price elasticity of demand for chicken breast is _____, and the price elasticity of demand is _____.

A)0.25; elastic
B)0.25; inelastic
C)4; elastic
D)4; inelastic

Question 28

The percent change in insulin demanded for any price change is zero. The demand curve for insulin is _____, and the price elasticity of demand is _____.

A)vertical; perfectly elastic
B)vertical; perfectly inelastic
C)horizontal; perfectly elastic
D)horizontal; perfectly inelastic

Question 29

Suppose the percentage change in newspapers demanded for any price change is infinite. The absolute value of the elasticity of demand for newspapers is _____, and demand is _____.

A)0; perfectly elastic
B)0; perfectly inelastic
C)infinity; perfectly elastic
D)infinity; perfectly inelastic

Question 30

You are given some data for four different products - milk, eggs, beef, and orange juice. The absolute value of the price elasticity of demand for milk is 3. The absolute value of the price elasticity of demand for eggs is 1.2. The absolute value of the price elasticity of demand for beef is 0.9. The absolute value of the price elasticity of demand for orange juice is 3.5. Which product has the most elastic demand?

A)milk
B)eggs
C)beef
D)orange juice

Question 31

You are given some data for four different products - milk, eggs, beef, and orange juice. The absolute value of the price elasticity of demand for beef is 0.9. The absolute value of the price elasticity of demand for orange juice is 3.5. Which product has the most inelastic demand?

A)milk
B)eggs
C)beef
D)orange juice

Question 32

You are given data on four products - toothpaste, shampoo, soap, and laundry detergent. The absolute value of the price elasticity of demand for toothpaste is 4. The absolute value of the price elasticity of demand for shampoo is 0.2. The absolute value of the price elasticity of demand for soap is 0.5. The absolute value of the price elasticity of demand for laundry detergent is 2. Which product has the most inelastic demand?

A)toothpaste
B)shampoo
C)soap
D)laundry detergent

Question 33

You are given some data for four different products - dryer sheets, shampoo, soap, and laundry detergent. The absolute value of the price elasticity of demand for dryer sheets is 4. The absolute value of the price elasticity of demand for shampoo is 0.2. The absolute value of the price elasticity of demand for soap is 0.5. The absolute value of the price elasticity of demand for laundry detergent is 2. Which product has the most elastic demand?

A)dryer sheets
B)shampoo
C)soap
D)laundry detergent

Question 34

Suppose the percent change in the quantity demanded for water for any price change is zero. The demand curve for water is _____, and the price elasticity of demand is perfectly _____.

A)vertical; perfectly elastic
B)vertical; perfectly inelastic
C)horizontal; perfectly elastic
D)horizontal; perfectly inelastic

Question 35

(Figure: Demand Curves) The figure shows four different demand curves for four products: A, B, C and D. Which of the products has the most elastic demand curve?

A)product A
B)product B
C)product C
D)product D

Question 36

(Figure: Demand Curves) The figure shows four different demand curves for four products: A, B, C, and D. Which of the products has the most inelastic demand curve?

A)product A
B)product B
C)product C
D)product D

Question 37

(Figure: Demand Curves) The figure shows four different demand curves for four products: A, B, C and D. Which of the products has a perfectly elastic demand curve?

A)product A
B)product B
C)product C
D)product D

Question 38

(Figure: Demand Curves) The figure shows four different demand curves for four different products: A, B, C and D. Which of the products has a perfectly inelastic demand curve?

A)product A
B)product B
C)product C
D)product D

Question 39

(Figure: Jane's Demand for Medication) It is mandatory for Jane to take several pills of a certain medication each day in order to remain healthy. The medication has no substitutes and is produced by only one pharmaceutical company. Which of the following demand curves represents Jane's demand for the medication?
​

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

Question 40

Demand is more elastic when you are shopping in Walmart than when you shop at a small convenience store because:

A)more competing products means greater elasticity.
B)specific brands tend to have more elastic demand than categories of goods.
C)necessities have less elastic demand.
D)consumer search makes demand more elastic.

Question 41

Demand for a particular fast-food chain inside an airport is less elastic than outside of the airport because:

A)necessities have less elastic demand.
B)fewer choices means more inelastic demand.
C)specific brands tend to have more elastic demand than categories of goods.
D)consumer search makes demand more elastic.

Question 42

Demand for soda outside an airport is more elastic than inside of the airport because:

A)necessities have less elastic demand.
B)fewer choices means more inelastic demand.
C)specific brands tend to have more elastic demand than categories of goods.
D)more choices makes demand more elastic.

Question 43

If an item is a necessity rather than a luxury, its demand curve will be:

A)perfectly elastic.
B)perfectly inelastic.
C)relatively steep.
D)relatively flat.

Question 44

The demand curve for one particular brand of cough syrup will _____ the demand curve for cough syrup as a general category.

A)be more elastic than
B)have the same elasticity as
C)be more inelastic than
D)have perfectly elastic demand when compared to

Question 45

If a consumer has more time to search for a low-cost alternative for an item, the demand curve for that item will be:

A)relatively more elastic.
B)relatively more inelastic.
C)relatively steep.
D)equal to zero.

Question 46

Suppose the price of gasoline rises. As time passes, people adjust to the higher price, and the demand for gasoline becomes:

A)more elastic.
B)more inelastic.
C)steeper.
D)higher.

Question 47

(Figure: The Demand Curve for Car Insurance) Use Figure: The Demand Curve for Car Insurance. Demand is _____ between $20 and $21, since total revenue _____ when the price _____.

A)elastic; increases; decreases
B)inelastic; stays the same; decreases
C)elastic; decreases; increases
D)inelastic; increases; increases

Question 48

If demand is _____, a higher price yields _____ total revenue.

A)inelastic; lower
B)inelastic; no change in
C)elastic; higher
D)elastic; lower

Question 49

Which of the following sellers will achieve their desired result for total revenue?

A)A pharmacy raises the price of its store-brand pain medication in order to raise revenue from sales. The store-brand medication has many brand-name substitutes.
B)A florist raises the price of roses before and on Valentine's Day and hopes to raise total revenue. The florist is the only flower shop in town.
C)An airline maintains higher prices in the hopes of maintaining sales. However, a new low-cost competing airline has just entered the market.
D)In a market with a relatively inelastic demand curve, a coffee shop lowers coffee prices in the hopes of raising total revenue.

Question 50

The cross-price elasticity of demand measures how responsive the:

A)demand for one good is to a change in the price of another good.
B)demand for one good is to a change in the demand for another good.
C)price of a good is to a change in the price of another good.
D)supply of one good is to a change in the price of another good.

Question 51

Two products have a cross-price elasticity of demand of 1.5. Based on this value of cross-price elasticity, which of the following products are they most likely to be?

A)a brand of tea and a brand of sugar
B)a brand of hot dog and a brand of hot dog bun
C)a brand of juice and a brand of computer
D)two competing brands of soft drinks

Question 52

Taking the absolute value of the cross-price elasticity of demand is incorrect because it would:

A)remove the ability to tell whether the two products have inelastic demand or elastic demand.
B)cause the value of the cross-price elasticity of demand to become smaller.
C)remove the ability to tell whether the two products are substitutes or complements.
D)cause the value of the cross-price elasticity of demand to become zero.

Question 53

The price of product A is cut by 30%. As a result, the quantity demanded of product B rises by 40%. The cross-price elasticity of demand between product A and product B is _____, and they are _____.

A)-0.75; substitutes
B)-1.25; complements
C)-1.33; complements
D)1.25; complements

Question 54

The price of product C rises by 10%. As a result, the quantity demanded of product D rises by 20%. The cross-price elasticity of demand between product C and product D is _____, and they are _____.

A)-2; substitutes
B)0.5; substitutes
C)2; substitutes
D)1.5; complements

Question 55

The price of product A is cut by 50%. As a result, the quantity demanded of product B rises by 50%. The cross-price elasticity of demand between product A and product B is _____, and they are _____.

A)-0.75; complements
B)-1.25; complements
C)-1; complements
D)1.25; complements

Question 56

The price of product C is cut by 10%. As a result, the quantity demanded of product D rises by 20%. The cross-price elasticity of demand between product C and product D is _____, and they are _____.

A)-0.75; complements
B)-1.25; complements
C)-2; complements
D)1.25; complements

Question 57

Income elasticity of demand measures how responsive the:

A)quantity demanded of a good is to changes in income.
B)quantity demanded of one good is to changes in demand for another good.
C)price of good is to price changes of another good.
D)quantity supplied of one good is to price changes of another good.

Question 58

Good M has an income elasticity of demand of -0.7. Which of the following items is good M?

A)bologna
B)organic eggs
C)cruise line tickets
D)designer handbags

Question 59

Good M has an income elasticity of demand of 0.5. Which of the following items is good M?

A)frozen pizza
B)electricity
C)a low-cost brand of noodle
D)steak dinner at a relatively expensive restaurant

Question 60

Taking the absolute value of the income elasticity of demand is incorrect because it would:

A)remove the ability to tell whether the two products have inelastic demand or elastic demand.
B)cause the value of the cross-price elasticity of demand to become smaller.
C)remove the ability to tell whether the product is an inferior good or a normal good.
D)cause the value of the cross-price elasticity of demand to become zero.

Question 61

Which of the following individuals is LEAST likely to lose their job if the economy is doing poorly?

A)Francesca, who works as a computer repair technician
B)Mercy, who works as a server in a high-end restaurant
C)Kamau, who works at a designer handbag store
D)Maruichi, who works as a manager at a fast-food restaurant

Question 62

If income rises by 20% and the quantity demanded of an item rises by 10%, the income elasticity of demand for this item is:

A)2.
B)-2.
C)0.5.
D)-0.5.

Question 63

If income rises by 10% and the quantity demanded of an item rises by 20%, the income elasticity of demand for this item is:

A)2.
B)-2.
C)0.5.
D)-0.5.

Question 64

If income rises by 20% and the quantity demanded of an item falls by 20%, the income elasticity of demand for this item is:

A)-1.
B)1.
C)-2.
D)-0.5.

Question 65

If income rises by 10% and the quantity demanded of an item falls by 30%, the income elasticity of demand for this item is:

A)0.67.
B)-0.33.
C)0.33.
D)-3.

Question 66

Delilah's income rises by 8%. She decides to increase the number of movie tickets she purchases by 20%. Her income elasticity of demand for movie tickets is:

A)2.5.
B)0.4.
C)0.8.
D)-2.5.

Question 67

Jonathan's income falls by 15%. He decides to cut down his purchases of high-end restaurant meals by 20%. His income elasticity of demand for high-end restaurant meals is:

A)1.33.
B)-0.75.
C)0.75.
D)-1.33.

Question 68

Good M has an income elasticity of demand of -0.7. Which of the following items might good M be?

A)champagne
B)cognac
C)organic, fresh juice
D)generic-brand toothpaste

Question 69

You are told that good M has an income elasticity of demand of 5. Which of the following items might good M be?

A)a hamburger
B)a hot dog
C)a premium computer
D)a used, 1999 budget four-door sedan

Question 70

The price of a dozen eggs falls from $3 to $2.70. In response to this price change, the quantity supplied of eggs falls from 100,000 dozen eggs to 75,000 dozen eggs. What is the price elasticity of supply for eggs?

A)2.7
B)0.37
C)0.5
D)2

Question 71

The price of cakes rises by 15%. In response, the quantity supplied of cakes rises by 30%. The price elasticity of supply for cakes is:

A)2.
B)0.5.
C)-0.5.
D)0.33.

Question 72

The price of gluten-free buns falls by 7%. In response, the quantity supplied of gluten-free buns falls by 3.5%. The price elasticity of supply for gluten-free buns is:

A)2.
B)0.5.
C)-0.5.
D)0.33.

Question 73

The price of a dozen eggs rises from $3 to $4.70. In response to this price change, quantity supplied increases from 100,000 dozen eggs to 127,000 dozen eggs. What is the approximate price elasticity of supply for eggs?

A)1.86
B)3.52
C)0.48
D)2.5

Question 74

If a firm produces a product that has easily available variable inputs, its supply curve will be:

A)perfectly elastic.
B)perfectly inelastic.
C)relatively steep.
D)relatively flat.

Question 75

(Figure: Supply Curves) The figure shows four different supply curves for four products: A, B, C, and D. Which of the products has the most elastic supply curve?

A)product A
B)product B
C)product C
D)product D

Question 76

(Figure: Supply Curves) The figure shows four different supply curves for four products: A, B, C and D. Which of the products has a perfectly elastic supply curve?

A)product A
B)product B
C)product C
D)product D

Question 77

(Figure: Supply Curves) The figure shows four different supply curves for four products: A, B, C and D. Which of the supply curves most likely shows a product that uses variable inputs that are the most readily available?

A)product A
B)product B
C)product C
D)product D

Question 78

(Figure: Supply Curves) The figure shows four different supply curves for four products: A, B, C and D. Which of the products has a perfectly inelastic supply curve?

A)product A
B)product B
C)product C
D)product D

Question 79

(Figure: Supply Curves) The figure shows four different supply curves for four products: A, B, C and D. Which of the products has an elastic, but not perfectly elastic, supply curve?

A)product A
B)product B
C)product C
D)product D

Question 80

(Figure: Supply Curves) The figure shows four different supply curves for four products: A, B, C and D. Which of the products has an inelastic, but not perfectly inelastic supply curve?

A)product A
B)product B
C)product C
D)product D