Question 1

If a good is a necessity,what would demand for the good tend to be&#10;A)elastic&#10;B)horizontal&#10;C)unit elastic&#10;D)inelastic

Accepted Answer

When a good is a necessity, the demand for it tends to be inelastic, meaning that changes in price have little effect on the quantity demanded. This is because consumers need the good regardless of its price, and therefore they are willing to pay whatever price is necessary to obtain it.

Question 2

What does the elasticity of demand for luxuries tend to be&#10;A)greater than 1&#10;B)less than 1&#10;C)equal to 1&#10;D)equal to 0

Accepted Answer

The elasticity of demand for luxuries tends to be greater than 1, meaning that a small change in price can lead to a large change in quantity demanded. This is because luxuries are often non-essential items, meaning that consumers can easily substitute them with similar goods or choose not to purchase them altogether if the price is too high.

Question 3

When is demand said to be inelastic&#10;A)if the quantity demanded changes only slightly when the price of the good changes&#10;B)if demand shifts only slightly when the price of the good changes&#10;C)if buyers respond substantially to changes in the price of the good&#10;D)if the price of the good responds only slightly to changes in demand

Accepted Answer

Demand is said to be inelastic if the quantity demanded changes only slightly when the price of the good changes. In other words, the responsiveness of quantity demanded to the price change is low. This could occur if the good is a necessity, has few substitutes, or if the consumers are insensitive to price changes.

Question 4

When quantity demanded responds substantially to changes in price,what is demand said to be&#10;A)elastic&#10;B)inelastic&#10;C)unit elastic&#10;D)perfectly elastic

Accepted Answer

When quantity demanded responds substantially to changes in price, demand is said to be elastic. This means that even a small change in price leads to a significant change in the quantity demanded. In other words, consumers are very sensitive to changes in price when demand is elastic. This is contrasted with inelastic demand, which means that consumers are not very responsive to changes in price. Elasticity of demand is an important concept in understanding consumer behavior and market dynamics.

Question 5

When studying how some event or policy affects a market,on what does elasticity provide information&#10;A)the direction and the efficiency of the effect on the market&#10;B)the direction and the magnitude of the effect on the market&#10;C)the magnitude and the efficiency of the effect on the market&#10;D)the efficiency and the equity of the effect on the market

Accepted Answer

Elasticity provides information about both the direction and magnitude of the effect on the market. Specifically, it measures how much the quantity demanded or supplied changes in response to a change in price or another factor affecting the market. If the elasticity is high (greater than 1), then a small change in price or policy will lead to a relatively large change in quantity, indicating a sensitive or responsive market. If the elasticity is low (less than 1), then a large change in price or policy will lead to a relatively small change in quantity, indicating an insensitive or unresponsive market. Therefore, understanding the elasticity of demand or supply can help policymakers and analysts predict and evaluate the effects of various interventions in the market.

Question 6

When would demand for a good tend to be more elastic&#10;A)when there are fewer options in the market&#10;B)when the time period considered is shorter&#10;C)when the good is considered more of a necessity&#10;D)when the good has more substitutes

Accepted Answer

When a good has more substitutes available in the market, consumers have more options to choose from, and therefore are more sensitive to changes in price. This makes the demand for the good more elastic.

Question 7

If a good is a luxury,what would demand for the good tend to be&#10;A)inelastic&#10;B)elastic&#10;C)unit elastic&#10;D)perfectly elastic

Accepted Answer

Luxury goods are not considered necessities, therefore, consumers have the ability to reduce their demand or completely forgo the product if the price increases too high. This means that the demand for luxury goods tends to be elastic, meaning that changes in price are likely to have a significant impact on the quantity demanded, and vice versa.

Question 8

When is demand said to be elastic&#10;A)if the price of the good responds substantially to changes in demand&#10;B)if demand shifts substantially when the price of the good changes&#10;C)if buyers do not respond to changes in the price of the good&#10;D)if the quantity demanded responds substantially to changes in the price of the good

Accepted Answer

Demand is said to be elastic when the quantity demanded responds substantially to changes in the price of the good. This means that small changes in price lead to larger changes in the quantity demanded.

Question 9

What does inelastic demand mean&#10;A)consumers hardly respond to a change in price.&#10;B)consumers respond substantially to a change in price.&#10;C)consumers respond directly to a change in income.&#10;D)change in quantity demanded is equal to the change in price.

Accepted Answer

Inelastic demand means that consumers hardly respond to a change in price, which results in a small change in quantity demanded. This is because products with inelastic demand are considered necessities or have no close substitutes, and consumers are willing to pay the same price even if it increases.

Question 10

What happens when the price elasticity of demand increases&#10;A)The responsiveness of quantity demanded to price decreases&#10;B)The responsiveness of quantity demanded to price decreases.&#10;C)The percentage change in price over the percentage change in quantity demanded increases.&#10;D)The responsiveness of quantity demanded to price increases.

Accepted Answer

When the price elasticity of demand increases, it means that the percentage change in quantity demanded in response to a change in price is greater. In other words, consumers become more sensitive to changes in price and are more likely to adjust their quantity demanded accordingly. Therefore, the responsiveness of quantity demanded to price increases.

Question 11

In general terms,what does elasticity measure&#10;A)how price is determined between buyers and sellers in a market&#10;B)how much government intervention is prevalent in a market&#10;C)how competitive a market is&#10;D)how much buyers and sellers respond to changes in market conditions

Accepted Answer

The answer of In general terms,what does elasticity measure&#10;A)how price...

Question 12

When quantity demanded responds only slightly to changes in price,what is demand said to be&#10;A)unit elastic&#10;B)elastic&#10;C)inelastic&#10;D)vertical

Accepted Answer

The answer of When quantity demanded responds only slightly to...

Question 13

When would demand for a good tend to be more inelastic&#10;A)when there are fewer available substitutes&#10;B)when the time period considered is longer&#10;C)when the good is considered more of a luxury good&#10;D)when the market is more narrowly defined

Accepted Answer

The answer of When would demand for a good tend...

Question 14

Why would vanilla cupcakes tend to have very elastic demand&#10;A)because it has many complements&#10;B)because the market is broadly defined&#10;C)because there are few substitutes&#10;D)because other flavours of cupcakes are almost perfect substitutes

Accepted Answer

The answer of Why would vanilla cupcakes tend to have...

Question 15

Why does Werther's Original candy tend to have an elastic demand&#10;A)because the candy market is too broadly defined&#10;B)because there are many close substitutes for Werther's&#10;C)because Werther's Original candy is considered by some to be a necessity&#10;D)because it is usually eaten quickly and therefore the time horizon is short

Accepted Answer

The answer of Why does Werther's Original candy tend to...

Question 16

What does the price elasticity of demand measure&#10;A)how responsive buyers are to a change in income&#10;B)how responsive sellers are to a change in price&#10;C)how responsive buyers are to a change in price&#10;D)how responsive sellers are to a change in buyers' incomes

Accepted Answer

The answer of What does the price elasticity of demand...

Question 17

Which of the following categories of goods would have the most elastic demand&#10;A)beverages&#10;B)soda pop&#10;C)colas&#10;D)Pepsi

Accepted Answer

The answer of Which of the following categories of goods...

Question 18

What does the price elasticity of demand measure&#10;A)a buyer's responsiveness to a change in the price of a good&#10;B)the increase in demand as additional buyers enter the market&#10;C)how much more of a good consumers will demand when incomes rise&#10;D)the increase in demand for a good when there is an increase in its price

Accepted Answer

The answer of What does the price elasticity of demand...

Question 19

What is the concept of elasticity used for&#10;A)to analyze how much the economy can produce&#10;B)to determine the level of government intervention in the economy&#10;C)to analyze supply and demand with changes in market condition&#10;D)to calculate consumer credit purchases

Accepted Answer

The answer of What is the concept of elasticity used...

Question 20

What type of demand does a person who has high cholesterol,and must exercise for an hour every day,have for exercise equipment&#10;A)elastic&#10;B)unit elastic&#10;C)inelastic&#10;D)perfectly elastic

Accepted Answer

The answer of What type of demand does a person...

Question 21

Figure 5-1&#10;  &#10;Refer to Figure 5-1.What is the elasticity of demand from point A to point B,using the midpoint method&#10;A)0.4&#10;B)1.0&#10;C)1.5&#10;D)2.5

Accepted Answer

The answer of Figure 5-1&#10;  &#10;Refer to Figure 5-1.What...

Question 22

When will a good have a more inelastic demand&#10;A)when the availability of close substitutes is greater&#10;B)when the definition of the market is narrower&#10;C)when the period of time is longer&#10;D)when the good is considered a necessity

Accepted Answer

The answer of When will a good have a more...

Question 23

What does the price elasticity of demand for a good measure&#10;A)how willing consumers are to move away from the good as price rises&#10;B)how willing firms are to produce more of a good as price rises&#10;C)how willing consumers are to buy more of a substitute good as price falls&#10;D)how willing firms are to produce more of a good as price falls

Accepted Answer

The answer of What does the price elasticity of demand...

Question 24

There are very few,if any,good substitutes for motor oil.What does this imply&#10;A)The supply of motor oil would tend to be price elastic.&#10;B)The demand for motor oil would tend to be price elastic.&#10;C)The demand for motor oil would tend to be price inelastic.&#10;D)The demand for motor oil would tend to be income elastic.

Accepted Answer

The answer of There are very few,if any,good substitutes for...

Question 25

Holding all other forces constant,when the price of gasoline rises,why would the number of litres of gasoline demanded fall substantially over a 10-year period&#10;A)Buyers tend to be much less sensitive to a change in price when given more time to react.&#10;B)Buyers will have substantially more income over a ten-year period.&#10;C)Buyers tend to be much more sensitive to a change in price when given more time to react.&#10;D)Gasoline has no substitutes.

Accepted Answer

The answer of Holding all other forces constant,when the price...

Question 26

Figure 5-1&#10;  &#10;Refer to Figure 5-1.If the price decreased from $18 to $6,what would happen to total revenue and what would this imply about demand elasticity&#10;A)Total revenue would increase by $1200 and demand would be elastic.&#10;B)Total revenue would increase by $800 and demand would be elastic.&#10;C)Total revenue would decrease by $1200 and demand would be inelastic.&#10;D)Total revenue would decrease by $800 and demand would be inelastic.

Accepted Answer

The answer of Figure 5-1&#10;  &#10;Refer to Figure 5-1.If...

Question 27

Serenity Spa increased its total monthly revenue from $11,250 to $12,350 when it raised the price of a massage from $75 to $95.What is the price elasticity of demand for Harry's Haircuts&#10;A)0.318&#10;B)0.416&#10;C)0.608&#10;D)0.816

Accepted Answer

The answer of Serenity Spa increased its total monthly revenue...

Question 28

If the price elasticity of demand for a good is 3.0,what would result from a 10 percent increase in price&#10;A)a 3 percent decrease in the quantity demanded&#10;B)a 10 percent decrease in the quantity demanded&#10;C)a 30 percent decrease in the quantity demanded&#10;D)a 300 percent decrease in the quantity demanded

Accepted Answer

The answer of If the price elasticity of demand for...

Question 29

Babar's Bakery made $200 last month selling 100 loaves of bread.This month it made $350 selling 70 loaves of bread.What is the price elasticity of demand for Babar's bread&#10;A)0.266&#10;B)0.583&#10;C)0.776&#10;D)1.110

Accepted Answer

The answer of Babar's Bakery made $200 last month selling...

Question 30

How do most economists report the elasticity of demand&#10;A)as the absolute value of the actual number&#10;B)as a negative number, since price and quantity demanded move in opposite directions&#10;C)as a percentage, since both the numerator and denominator are percentages&#10;D)as a dollar amount, since we are measuring the change in price

Accepted Answer

The answer of How do most economists report the elasticity...

Question 31

Suppose the price of Twinkle snack cakes is reduced from $1.50 to $1.00 and,as a result,the quantity of Twinkle snack cakes demanded increases from 2000 to 2200.Using the midpoint method,what is the price elasticity of demand for Twinkle snack cakes in the given price range

A)0.24
B)0.40
C)1.50
D)4.21

Accepted Answer

The answer of Suppose the price of Twinkle snack cakes...

Question 32

What is the main reason for using the midpoint method&#10;A)It gives the same answer regardless of the direction of change.&#10;B)It uses fewer numbers.&#10;C)It rounds prices to the nearest dollar.&#10;D)It rounds quantities to the nearest whole unit.

Accepted Answer

The answer of What is the main reason for using...

Question 33

Suppose there is a 3 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded.What is the price elasticity of demand for X&#10;A)0&#10;B)2&#10;C)6&#10;D)infinite

Accepted Answer

The answer of Suppose there is a 3 percent increase...

Question 34

How do economists compute the price elasticity of demand&#10;A)the percentage change in the price divided by the percentage change in quantity demanded&#10;B)the percentage change in income divided by the percentage change in the quantity demanded&#10;C)the percentage change in the quantity demanded divided by the percentage change in price&#10;D)the percentage change in the quantity demanded divided by the percentage change in income

Accepted Answer

The answer of How do economists compute the price elasticity...

Question 35

Figure 5-1&#10;  &#10;Refer to Figure 5-1.What is the elasticity of demand from point B to point C,using the midpoint method&#10;A)0.50&#10;B)0.75&#10;C)1.00&#10;D)1.30

Accepted Answer

The answer of Figure 5-1&#10;  &#10;Refer to Figure 5-1.What...

Question 36

When the local used bookstore prices economics books at $100 each,they generally sell 70 per month.If they lower the price to $70 each,they sell 90.Given this,what is the elasticity of demand for economics books,and what action should the store take

A)2.91; the store should lower prices to raise total revenue.
B)2.91; the store should raise prices to raise total revenue.
C)0.714; the store should lower prices to raise total revenue.
D)0.714; the store should raise prices to raise total revenue.

Accepted Answer

The answer of When the local used bookstore prices economics...

Question 37

When the price of kittens was $20 each,the pet shop sold 20 per month.When they raised the price to $30 each,they sold 14 per month.What is the elasticity of demand for kittens&#10;A)0.66&#10;B)0.94&#10;C)1.36&#10;D)1.66

Accepted Answer

The answer of When the price of kittens was $20...

Question 38

When the price of bubble gum is $0.55,the quantity demanded is 400 packs per day.When the price falls to $0.45,the quantity demanded increases to 600.Given this information,and using the midpoint method,what do you know about the demand for bubble gum

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

Accepted Answer

The answer of When the price of bubble gum is...

Question 39

Why is the midpoint method used to compute elasticity&#10;A)It automatically computes a positive number instead of a negative number.&#10;B)It uses the same equation that is used to compute slope.&#10;C)It gives the same answer regardless of the direction of change.&#10;D)It automatically rounds quantities to the nearest whole unit.

Accepted Answer

The answer of Why is the midpoint method used to...

Question 40

If a 5 percent increase in price causes a 15 percent decrease in quantity demanded,what might be said about this product&#10;A)It has no close substitute.&#10;B)It might be a luxury.&#10;C)It might be part of a broadly defined market.&#10;D)It might be in a short time horizon.

Accepted Answer

The answer of If a 5 percent increase in price...

Question 41

If a change in the price of a product results in no change in total revenue,what must be the case&#10;A)The demand for the product must be elastic.&#10;B)The demand for the product must be inelastic.&#10;C)The demand for the product must be unit elastic.&#10;D)The demand for the product must be revenue inelastic.

Accepted Answer

The answer of If a change in the price of...

Question 42

Moving down a linear demand curve,what happens to elasticity&#10;A)It gets smaller, then larger.&#10;B)It gets larger.&#10;C)It gets smaller.&#10;D)It gets larger, then smaller.

Accepted Answer

The answer of Moving down a linear demand curve,what happens...

Question 43

Moving down a linear demand curve,what happens to the slope and the elasticity&#10;A)The slope and elasticity are both constant.&#10;B)The slope changes but elasticity is constant.&#10;C)The slope and elasticity both get smaller.&#10;D)The slope is constant but elasticity gets smaller.

Accepted Answer

The answer of Moving down a linear demand curve,what happens...

Question 44

When demand is inelastic,what will a decrease in price cause&#10;A)an increase in total revenue&#10;B)a decrease in total revenue&#10;C)no change in total revenue&#10;D)an uncertain change in total revenue

Accepted Answer

The answer of When demand is inelastic,what will a decrease...

Question 45

What would be the absolute value of the elasticity if demand is inelastic&#10;A)less than 1&#10;B)equal to 1&#10;C)greater than 1&#10;D)equal to 0

Accepted Answer

The answer of What would be the absolute value of...

Question 46

Suppose that 100 candy bars are demanded at a particular price.If the price of candy bars rises by 4 percent,the number of candy bars demanded falls to 92 candy bars.According to the midpoint method,what does this mean

A)The demand for candy bars in this price range is elastic.
B)The demand for candy bars in this price range is inelastic.
C)The price elasticity of demand for candy bars is 0.
D)The demand for candy bars is unit elastic.

Accepted Answer

The answer of Suppose that 100 candy bars are demanded...

Question 47

What would be the absolute value of the elasticity if demand is elastic&#10;A)less than 1&#10;B)equal to 1&#10;C)equal to 0&#10;D)greater than 1

Accepted Answer

The answer of What would be the absolute value of...

Question 48

Figure 5-2&#10;  &#10;Refer to Figure 5-2.As price falls from PA to PB,which demand curve is least elastic&#10;A)D&#8321;&#10;B)D&#8322;&#10;C)D&#8323;&#10;D)D&#8324;

Accepted Answer

The answer of Figure 5-2&#10;  &#10;Refer to Figure 5-2.As...

Question 49

Moving up a linear demand curve,what happens to total revenue&#10;A)It increases, then decreases.&#10;B)It decreases, then increases.&#10;C)It increases.&#10;D)It decreases.

Accepted Answer

The answer of Moving up a linear demand curve,what happens...

Question 50

Elasticity of demand is closely related to the slope of the demand curve.What is the slope when demand elasticity is greater&#10;A)steeper&#10;B)further to the right&#10;C)flatter&#10;D)closer to the vertical axis

Accepted Answer

The answer of Elasticity of demand is closely related to...

Question 51

When is demand said to be unit elastic&#10;A)when the quantity demanded changes by the same percentage as the price&#10;B)when the quantity demanded changes by a larger percentage than the price&#10;C)when the quantity demanded changes by a smaller percentage than the price&#10;D)when the quantity demanded does not respond to a change in price

Accepted Answer

The answer of When is demand said to be unit...

Question 52

Suppose the government increases the tax on gasoline in order to raise revenue.Since raising the gasoline tax would increase the price of gasoline,what must the government be assuming&#10;A)The demand for gasoline is price elastic.&#10;B)The demand for gasoline is price inelastic.&#10;C)The demand for gasoline is price unit elastic.&#10;D)The demand for gasoline is price perfect elastic.

Accepted Answer

The answer of Suppose the government increases the tax on...

Question 53

When the price to stream movies is $4,Denise rents five per month.When the price is $3,she rents nine per month.What is Denise's demand for movie streaming,and how steep would her demand curve be&#10;A)Her demand is elastic and the curve would be relatively flat.&#10;B)Her demand is elastic and the curve would be relatively steep.&#10;C)Her demand is inelastic and the curve would be relatively flat.&#10;D)Her demand is inelastic and the curve would be relatively steep.

Accepted Answer

The answer of When the price to stream movies is...

Question 54

If a demand curve is vertical,what are its slope and elasticity&#10;A)undefined and elasticity equals 0&#10;B)0 and elasticity is undefined&#10;C)undefined, as is elasticity&#10;D)0, as is elasticity

Accepted Answer

The answer of If a demand curve is vertical,what are...

Question 55

Figure 5-2&#10;  &#10;Refer to Figure 5-2.As price falls from PA to PB,which demand curve is most elastic&#10;A)D&#8321;&#10;B)D&#8322;&#10;C)D&#8323;&#10;D)D&#8324;

Accepted Answer

The answer of Figure 5-2&#10;  &#10;Refer to Figure 5-2.As...

Question 56

When is demand said to be inelastic&#10;A)when the quantity demanded changes proportionately more than price&#10;B)when the quantity demanded changes proportionately more than income&#10;C)when the quantity demanded changes proportionately less than price&#10;D)when the quantity demanded changes proportionately less than income

Accepted Answer

The answer of When is demand said to be inelastic&#10;A)when...

Question 57

When demand is unit elastic,what is the price elasticity and what is the effect on total revenue of a price change&#10;A)The price elasticity exactly equals 1 and total revenue does not change when price changes.&#10;B)The price elasticity exactly equals 1 and total revenue and price move in opposite directions.&#10;C)The price elasticity exactly equals 1 and total revenue and price move in the same direction.&#10;D)The price elasticity approaches infinity and total revenue does not change when price changes.

Accepted Answer

The answer of When demand is unit elastic,what is the...

Question 58

What does a flatter demand curve represent&#10;A)greater price elasticity of demand&#10;B)smaller price elasticity of demand&#10;C)price elasticity of demand that is close to the slope of the curve&#10;D)price elasticity of demand that is equal to the slope of the curve

Accepted Answer

The answer of What does a flatter demand curve represent&#10;A)greater...

Question 59

If a demand curve is horizontal,what are its slope and elasticity&#10;A)undefined and elasticity equals 0&#10;B)0 and elasticity is undefined&#10;C)undefined, as is elasticity&#10;D)0, as is elasticity

Accepted Answer

The answer of If a demand curve is horizontal,what are...

Question 60

What would be the absolute value of the elasticity if demand is unit elastic&#10;A)less than 1&#10;B)greater than 1&#10;C)equal to 1&#10;D)equal to 0

Accepted Answer

The answer of What would be the absolute value of...

Question 61

What happens in the case of perfectly inelastic demand&#10;A)Quantity demanded stays the same regardless of price changes.&#10;B)Huge changes in quantity demanded result from very small changes in the price.&#10;C)The change in quantity demanded exactly equals the change in price.&#10;D)The change in quantity demanded will be twice the change in price.

Accepted Answer

The answer of What happens in the case of perfectly...

Question 62

What is the slope of a perfectly inelastic demand curve,and why&#10;A)negatively sloped, because buyers decrease their purchases when the price rises&#10;B)vertical, because buyers purchase the same amount whether the price rises or falls&#10;C)positively sloped, because buyers respond by increasing their purchases when price rises&#10;D)horizontal, because buyers increase their purchases by huge amounts with slight changes in price

Accepted Answer

The answer of What is the slope of a perfectly...

Question 63

If a demand curve has a zero elasticity,which statement best describes the curve&#10;A)It is perfectly inelastic and vertical.&#10;B)It is perfectly inelastic and horizontal.&#10;C)It is perfectly elastic and vertical.&#10;D)It is perfectly elastic and horizontal.

Accepted Answer

The answer of If a demand curve has a zero...

Question 64

As elasticity of demand increases,what happens to the demand curve&#10;A)It gets flatter and the price elasticity of demand will eventually be less than 1.&#10;B)It gets steeper and the price elasticity of demand will eventually be greater than 1.&#10;C)It gets flatter and the price elasticity of demand will eventually be greater than 1.&#10;D)It gets steeper and the price elasticity of demand will eventually be less than 1.

Accepted Answer

The answer of As elasticity of demand increases,what happens to...

Deck 5: Elasticity and Its Application