Question 1

The demand for strawberry ice cream tends to be relatively price-elastic because:
A.for most people there are many close substitutes for strawberry ice cream.
B.it is a necessity for most people.
C.it has to be consumed very quickly.
D.it costs so little.

Accepted Answer

The answer of The demand for strawberry ice cream tends...

Question 2

An important determinant of the price elasticity of demand is the:
A.importance of the good in household budgets.
C.level of technology.
C .quantity of the good supplied.
D.extent of government regulation.

Accepted Answer

The answer of An important determinant of the price elasticity...

Question 3

Other things being equal, the price elasticity of demand for a product will be lower:
A.if there are many substitutes available.
B.if it is a large part of the consumer's budget.
C.in the long run as compared to the short run.
D.if there are few or no substitutes available.

Accepted Answer

The answer of Other things being equal, the price elasticity...

Question 4

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination.Therefore, you would expect the demand for:
A.medical exams to be more price-elastic.
B.Bayer aspirin to be more price-elastic.
C.Bayer aspirin to be more price-inelastic.

Accepted Answer

The answer of There are several close substitutes for Bayer...

Question 5

If a good is a luxury item that looms large in the household budget, then demand will tend to:
A.be more price-elastic.
B.be less price-elastic.
C.have price elasticity equal to 1.
D.be the same as that of a good that is a necessity.

Accepted Answer

The answer of If a good is a luxury item...

Question 6

If a good is a necessity with few substitutes, then demand will tend to:
A)be more price-elastic.
B)be less price-elastic.
C)have price elasticity equal to 1.
D)be the same as that of a luxury good.

Accepted Answer

When a good is a necessity with few substitutes, consumers are less likely to be able to find alternatives if the price of the good increases, therefore the demand will be less price-elastic.

Question 7

If the price of emergency visits to the doctor were to rise, we would expect:
A.a significant decline in the number of emergency visits to the doctor.
B.only a slight decline in the number of emergency visits to the doctor.
C.the number of emergency visits to the doctor to increase.
D.the total income of doctors to fall dramatically.

Accepted Answer

The answer of If the price of emergency visits to...

Question 8

The price elasticity of a good will tend to be larger:
A.the longer the relevant time period.
B.the fewer number of substitute goods available.
C.if it is a staple.
D.if it is relatively inexpensive.

Accepted Answer

The answer of The price elasticity of a good will...

Question 9

There are several close substitutes for Quaker State oil but fewer substitutes for a complete checkup of your car's engine.We can expect the demand for:
A.Quaker State oil to be more price-inelastic.
B.the two to be equally price-elastic.
C.car checkups to be more price-elastic.
D.Quaker State oil to be more price-elastic.

Accepted Answer

The answer of There are several close substitutes for Quaker...

Question 10

An important determinant of the price elasticity of demand is the:
A.time period.
B.price of related goods.
C.level of technology.
D.quantity of the good supplied.

Accepted Answer

The time period is an important determinant of price elasticity because over time, consumers may have more options to substitute a good with a cheaper alternative, making demand more elastic. In the short run, consumers may not have as many choices, making demand less elastic. Therefore, the longer the time period, the more elastic the demand becomes. The price of related goods (B), level of technology (C), and quantity of the good supplied (D) can also affect the price elasticity of demand, but to a lesser extent than the time period.

Question 11

The demand for strawberry ice cream tends to be relatively price-elastic because:
A.for most people there are many close substitutes for strawberry ice cream.
B.it costs so little.
C.it has to be consumed very quickly.
D.for most people there are many close substitutes for strawberry ice cream and because it costs so little.

Accepted Answer

The answer of The demand for strawberry ice cream tends...

Question 12

Which of the following is not a factor in determining the price elasticity of demand?
A.the number of available substitutes
B.the time period involved
C.the proportion of the budget spent on the item
D.the slope of the supply curve

Accepted Answer

The slope of the supply curve is not a factor in determining the price elasticity of demand. Price elasticity of demand is based on how consumers react to changes in price, which is influenced by factors such as the availability of substitutes, the time period involved, and the proportion of the budget spent on the item. The slope of the supply curve, on the other hand, pertains to the relationship between price and quantity supplied by producers.

Question 13

A newspaper typically consumes a smaller fraction of a consumer's budget than a home entertainment system.Therefore, you would expect the demand for:
A.a home entertainment system to be more price-elastic.
B.a home entertainment system to be more price-inelastic.
C.newspapers to be more price-elastic.
D.the two to be equally price-elastic.

Accepted Answer

When a product represents a smaller fraction of a consumer's budget, it tends to have a more price-elastic demand, meaning that changes in price will have a greater effect on the quantity demanded. Therefore, since newspapers consume a smaller fraction of a consumer's budget than a home entertainment system, newspapers are expected to have a more price-elastic demand. Conversely, a home entertainment system, which represents a larger fraction of a consumer's budget, would have a more price-inelastic demand.

Question 14

Determining the price elasticity of demand involves all of the following factors except:
A.the slope of the supply curve.
B.the proportion of the budget spent on the item.
C.the time period involved.
D.the number of available substitutes.

Accepted Answer

The answer of Determining the price elasticity of demand involves...

Question 15

If a good has a price inelastic demand, then which of the following is not likely to be characteristic of this good?
A.The good is a necessity and is relatively unimportant in the household budget.
B.There are many substitutes for the good.
C.Consumers spend a small percentage of their income on the good.
D.Consumers do not have much time to adjust to market changes.

Accepted Answer

If a good has a price inelastic demand, it means that changes in the price of the good do not have a significant impact on the quantity demanded by consumers. If there are many substitutes for the good (option B), then consumers are more likely to switch to a different product when the price of the original good increases, indicating a more elastic demand. The other options are more likely to be characteristic of a good with a price inelastic demand.

Question 16

On a linear demand curve, demand at lower prices will:
A.be price-inelastic.
B.be price-elastic.
C.be price unit-elastic.
D.have negative price elasticity.

Accepted Answer

The answer of On a linear demand curve, demand at...

Question 17

If someone did not regard health care as very important, often using home remedies and other substitutes, compared to other people, his or her demand curve for health care would most likely be over the relevant range of prices for health care.
A.more price-elastic
B.more price-inelastic
C.horizontal
D.vertical

Accepted Answer

The answer of If someone did not regard health care...

Question 18

If a good is a necessity with few substitutes, then demand will tend to:
A)be more price-elastic.
B)be more price-inelastic.
C)have price elasticity equal to 1.
D)be the same as that of a luxury good.

Accepted Answer

When a good is a necessity with few substitutes, consumers are likely to continue buying it even if the price rises. As a result, demand will tend to be more price-inelastic. When a good is a necessity with few substitutes, demand tends to be more price-inelastic. This is because consumers have no choice but to purchase the good, regardless of its price changes.

Question 19

As you move down a linear demand curve, the price elasticity of demand will:
A)increase.
B)decrease.
C)increase and then decrease.
D)decrease and then increase.

Accepted Answer

As you move down a linear demand curve, the quantity demanded increases, and so the price elasticity of demand decreases. At higher prices, demand is more price-sensitive because consumers have more alternatives available to them. At lower prices, demand becomes less sensitive because alternatives are limited and consumers have already purchased the product at a higher price point. As we move down a linear demand curve, the quantity demanded increases and the price per unit decreases. This means that consumers are becoming less sensitive to price changes, as they are willing to purchase more at lower prices. Therefore, the price elasticity of demand will decrease, indicating a less responsive demand to changes in price.

Question 20

An important determinant of the price elasticity of demand is the:
A)price of related goods.
B)level of technology.
C)availability of substitutes.
D)quantity of the good supplied.

Accepted Answer

The availability of substitutes is a key determinant of the price elasticity of demand. If consumers have many substitute products available to them, they can easily switch to those alternatives if the price of one product increases. In this case, the demand for the original product will be highly elastic, as even a small change in price may result in a large change in the quantity demanded. On the other hand, if there are very few substitutes available, consumers will have fewer options and may be willing to pay a higher price for the original product. In this case, the demand will be relatively inelastic. Therefore, the availability of substitutes is a crucial factor in determining the price elasticity of demand. The availability of substitutes is a major determinant of price elasticity of demand. If there are many substitutes available for a good or service, consumers may switch to those substitutes if the price of the original good or service rises, making the demand more elastic. On the other hand, if there are few or no substitutes available, consumers may be willing to continue purchasing the good or service even if the price increases, making the demand more inelastic. Factors like the price of related goods, level of technology, and the quantity of the good supplied can also influence price elasticity, but to a lesser extent.

Quiz 6: Elasticity

The demand for strawberry ice cream tends to be relatively price-elastic because: A.for most people there are many close substitutes for strawberry ice cream. B.it is a necessity for most people. C.it has to be consumed very quickly. D.it costs so little.

An important determinant of the price elasticity of demand is the: A.importance of the good in household budgets. C.level of technology. C .quantity of the good supplied. D.extent of government regulation.

Other things being equal, the price elasticity of demand for a product will be lower: A.if there are many substitutes available. B.if it is a large part of the consumer's budget. C.in the long run as compared to the short run. D.if there are few or no substitutes available.

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination.Therefore, you would expect the demand for: A.medical exams to be more price-elastic. B.Bayer aspirin to be more price-elastic. C.Bayer aspirin to be more price-inelastic.

If a good is a luxury item that looms large in the household budget, then demand will tend to: A.be more price-elastic. B.be less price-elastic. C.have price elasticity equal to 1. D.be the same as that of a good that is a necessity.

If a good is a necessity with few substitutes, then demand will tend to:

The price elasticity of a good will tend to be larger: A.the longer the relevant time period. B.the fewer number of substitute goods available. C.if it is a staple. D.if it is relatively inexpensive.

An important determinant of the price elasticity of demand is the: A.time period. B.price of related goods. C.level of technology. D.quantity of the good supplied.

Which of the following is not a factor in determining the price elasticity of demand? A.the number of available substitutes B.the time period involved C.the proportion of the budget spent on the item D.the slope of the supply curve

Determining the price elasticity of demand involves all of the following factors except: A.the slope of the supply curve. B.the proportion of the budget spent on the item. C.the time period involved. D.the number of available substitutes.

On a linear demand curve, demand at lower prices will: A.be price-inelastic. B.be price-elastic. C.be price unit-elastic. D.have negative price elasticity.

If a good is a necessity with few substitutes, then demand will tend to:

As you move down a linear demand curve, the price elasticity of demand will:

An important determinant of the price elasticity of demand is the: