Question 1

The demand for _______ is more elastic than the demand for _______.
A) chewing gum; cars
B) all personal computers; Dell computers
C) food; exotic vacations
D) Pepsi; all soft beverages

Accepted Answer

The answer of The demand for _______ is more elastic...

Question 2

Pizza Hut pizza has more close substitutes than does food in general. The price elasticity of demand for Pizza Hut pizza is _______ the price elasticity of demand for food in general.
A) greater than
B) the same as
C) less than
D) not comparable to

Accepted Answer

The price elasticity of demand for Pizza Hut pizza is greater than the price elasticity of demand for food in general because there are more close substitutes for Pizza Hut pizza, making consumers more sensitive to changes in its price.

Question 3

-The demand curve in the figure above illustrates the demand for a product with
A) infinite price elasticity of demand.
B) a price elasticity of demand that is different at all prices.
C) unit price elasticity of demand at all prices.
D) zero price elasticity of demand at all prices.

Accepted Answer

The answer of 
-The demand curve in the figure above...

Question 4

Last year when John graduated and received a 20 per cent pay increase, the number of restaurant meals he consumed rose from one a week to three a week. Hence his income elasticity for restaurant meals is
A) 0.50.
B) - 5.00.
C) - 0.50.
D) 5.00.

Accepted Answer

Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. Here, the quantity demanded of restaurant meals increased from 1 to 3, which is a 200% increase (from 1 to 3 is an increase of 2, and 2/1*100 = 200%). The income increased by 20%. Therefore, the income elasticity of demand is 200% / 20% = 10. However, since the options provided do not include 10, it seems there was a mistake in interpreting the options. The correct interpretation, based on the options given, would suggest an understanding of the concept rather than the exact calculation. Given the significant increase in demand relative to the income increase, the correct answer intended is likely D) 5.00, assuming a misinterpretation in the calculation process.

Question 5

Suppose a 10 per cent increase in the price of textbooks decreases the quantity demanded by 20 per cent. The elasticity of demand for textbooks is
A) 10.0.
B) 0.2.
C) 2.0.
D) 5.0.

Accepted Answer

The elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price, which in this case is -20% / 10% = -2.0, indicating an elasticity of 2.0.

Question 6

The greater the substitutability between Northwest timber and Southeast timber, the _______ is the cross elasticity of demand between timber from the two regions and the _______ is the elasticity of demand for Northwest timber.
A) smaller; smaller
B) larger; larger
C) larger; smaller
D) smaller; larger

Accepted Answer

The greater the substitutability between two goods, the larger the cross elasticity of demand, as consumers will more readily switch from one to the other if the price changes. Similarly, if Northwest timber has many substitutes (including Southeast timber), the demand for it becomes more elastic, as consumers can easily switch to alternatives if the price of Northwest timber rises.

Question 7

If the elasticity of supply is 4, a 10 per cent increase in the price of a good leads to a
A) 4 per cent decrease in the quantity demanded.
B) 2.5 per cent increase in the quantity supplied.
C) 40 per cent increase in the quantity supplied.
D) 2.5 per cent decrease in the quantity demanded.

Accepted Answer

The elasticity of supply measures how much the quantity supplied of a good responds to a change in the price of that good. With an elasticity of 4, a 10 per cent increase in price leads to a 40 per cent increase in the quantity supplied (Elasticity = percentage change in quantity supplied / percentage change in price, so 4 = x% / 10%, x = 40%).

Question 8

If the price of one good increases by 3 per cent and the quantity demanded of another good increases by 2 per cent, the cross elasticity is _______ and the two goods are _______ .
A) 2/3, substitutes
B) 3/2, complements
C) 3/2, substitutes
D) 2/3, complements

Accepted Answer

Cross elasticity of demand is calculated as the percentage change in quantity demanded of one good divided by the percentage change in price of another good. Here, it is 2%/3% = 2/3. Since the cross elasticity is positive, the goods are substitutes.

Question 9

If a small percentage decrease in the price of chocolate causes a larger percentage decrease in the quantity supplied, the
A) demand for chocolate is elastic.
B) supply of chocolate is elastic.
C) demand for chocolate is inelastic.
D) supply of chocolate is inelastic.

Accepted Answer

The supply of chocolate is elastic because a small percentage decrease in price leads to a larger percentage decrease in the quantity supplied, indicating sensitivity to price changes.

Question 10

-The table above gives the demand schedule for snow peas. The price elasticity of demand between
$6)00 and $7.00 per kilogram is
A) 2.6.
B) 2.0.
C) 1.0.
D) 5.0.

Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Between $6.00 and $7.00 per kilogram, the quantity demanded decreases from 100 to 80 kilograms, a decrease of 20%. The price increases from $6.00 to $7.00, an increase of 16.67%. Therefore, the price elasticity of demand is 20% / 16.67% = 1.2.

Quiz 4: Elasticity

The demand for _ is more elastic than the demand for _.

Pizza Hut pizza has more close substitutes than does food in general. The price elasticity of demand for Pizza Hut pizza is _______ the price elasticity of demand for food in general.

-The demand curve in the figure above illustrates the demand for a product with

Last year when John graduated and received a 20 per cent pay increase, the number of restaurant meals he consumed rose from one a week to three a week. Hence his income elasticity for restaurant meals is

Suppose a 10 per cent increase in the price of textbooks decreases the quantity demanded by 20 per cent. The elasticity of demand for textbooks is

The greater the substitutability between Northwest timber and Southeast timber, the _ is the cross elasticity of demand between timber from the two regions and the _ is the elasticity of demand for Northwest timber.

If the elasticity of supply is 4, a 10 per cent increase in the price of a good leads to a

If the price of one good increases by 3 per cent and the quantity demanded of another good increases by 2 per cent, the cross elasticity is _ and the two goods are _ .

If a small percentage decrease in the price of chocolate causes a larger percentage decrease in the quantity supplied, the

-The table above gives the demand schedule for snow peas. The price elasticity of demand between $6) 00 and $7.00 per kilogram is