Deck 6: Elasticity

Question 1

The price elasticity of demand is:

A) the amount that price will change in response to a change in buyers' income.
B) a measure of how responsive a market is to changes in quantity.
C) a measure of consumers' sensitivity to price changes.
D) a measure of consumers' sensitivity to changes in supply.

Answer 1

C

Question 2

How is price elasticity of demand calculated?

A) the ratio of the percentage change in price to the percentage change in quantity demanded
B) the ratio of the percentage change in quantity demanded to the percentage change in price
C) the difference between the percentage change in price and the percentage change in quantity demanded
D) the difference between the percentage change in quantity demanded and the percentage change in price

Answer 2

B

Question 3

An economist who wants to measure a consumer's sensitivity to price changes would:

A) use a market model.
B) calculate the consumer's price elasticity of demand.
C) calculate the consumer's income elasticity of demand.
D) use a production possibilities frontier.

Answer 3

B

Question 4

What is the correct way to calculate price elasticity of demand?

A)
B)
C)
D)

Question 5

(Use Figure: The Demand for Scented Candles) Use the figure The Demand for Scented Candles. What is the price elasticity of demand when price decreases from $6 to $4?
​
Figure: The Demand for Scented Candles

A) 0.43
B) 2.33
C) 1
D) 0.4

Question 6

(Use Figure: The Demand for Scented Candles) Use the figure The Demand for Scented Candles. What is the price elasticity of demand when price increases from $11 to $13?
​
Figure: The Demand for Scented Candles

A) 1
B) 1.22
C) 0.82
D) 0.4

Question 7

(Use Figure: The Demand for Scented Candles) Use the figure The Demand for Scented Candles. What is the price elasticity of demand when price decreases from $3 to $1?
​
Figure: The Demand for Scented Candles

A) 19
B) 0.9
C) 0.05
D) 1

Question 8

The price of a good is initially $4, and the quantity demanded is 30. When the price increases to $6, the quantity demanded decreases to 20. What is the price elasticity of demand between these two prices?

A) 1
B) 0.67
C) 0.4
D) 10

Question 9

When the price of football ticket is $100, Eric buys four tickets each year. When the price is $90, he buys six tickets each year. What is Eric's price elasticity of demand when price decreases?

A) 5
B) 0.2
C) 3
D) 1.5

Question 10

The price elasticity of demand is always:

A) positive because price and quantity supplied are positively related.
B) negative because people buy more when income increases.
C) positive because price and quantity always move in the same direction.
D) negative because price and quantity demanded are inversely related.

Question 11

A price _____ leads to an increase in quantity demanded, which is why price elasticity of demand is always:

A) increase; positive.
B) decrease; positive.
C) decrease; negative.
D) increase; negative.

Question 12

Use the table Price Elasticities of Demand for Four Goods I. If the price of each of these goods increases by 1 percent, which good will have the largest percentage decrease in quantity demanded?

A) ice cream
B) boba tea
C) funnel cakes
D) curly fries

Question 13

Use the table Price Elasticities of Demand for Four Goods I. How are these goods ranked from most responsive to a price change to least responsive to a price change?

A) ice cream, boba tea, funnel cakes, curly fries
B) curly fries, boba tea, ice cream, funnel cakes
C) funnel cakes, curly fries, boba tea, ice cream
D) funnel cakes, ice cream, boba tea, curly fries

Question 14

Use the table Price Elasticities of Demand for Four Goods II. If the price of each of these goods increases by 1 percent, which good will have the largest percentage decrease in quantity demanded?

A) cheeseburgers
B) nachos
C) churros
D) hot dogs

Question 15

Use the table Price Elasticities of Demand for Four Goods II. How are these goods ranked from least responsive to a price change to most responsive to a price change?

A) cheeseburgers, nachos, churros, hot dogs
B) nachos, hot dogs, churros, cheeseburgers
C) cheeseburgers, hot dogs, churros, nachos
D) cheeseburgers, churros, hot dogs, nachos

Question 16

_____ demand is when the price elasticity of demand is less than 1.

A) Inelastic
B) Elastic
C) Perfectly elastic
D) Unit elastic

Question 17

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. Which good will have the largest change in quantity demanded if she lowers the price of all of her goods by 1 percent?
​

A) 3-D printer
B) maker cart
C) magic pen
D) filament

Question 18

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. Which good has an inelastic demand?
​

A) 3-D printer
B) maker cart
C) magic pen
D) filament

Question 19

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. Which good does NOT have an elastic demand?
​

A) 3-D printer
B) maker cart
C) magic pen
D) filament

Question 20

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. All else equal, which good has the fewest substitutes?
​

A) 3-D printer
B) maker cart
C) magic pen
D) filament

Question 21

When a consumer's change in quantity demanded for a product is relatively smaller than the change in the price of that product, then demand is considered to be:

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

Question 22

If you buy a plane ticket at the last minute, your demand is likely to be:

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

Question 23

Demand is likely to be inelastic if:

A) consumers are able to shop around for the best price.
B) a good costs a lot.
C) consumers have little choice but to purchase a good.
D) a good has many close substitutes.

Question 24

In which of the following situations would a good NOT have a relatively inelastic demand?

A) You can search for the best price for a good.
B) You are shopping at the last minute.
C) The price of the good is very low.
D) The good is a necessity.

Question 25

If consumers' response to a price change is a relatively large change in the quantity demanded, then the price elasticity of demand is _____, and demand is considered to be:

A) less than one; inelastic.
B) greater than one; inelastic.
C) less than one; elastic.
D) greater than one; elastic.

Question 26

A good is considered to have an elastic demand when the price elasticity of demand is:

A) equal to 0.
B) less than 1.
C) greater than 1.
D) less than 0.

Question 27

Demand is typically elastic for goods that are:

A) necessities.
B) luxuries.
C) last-minute purchases.
D) very cheap.

Question 28

In which of the following situations would demand NOT be elastic?

A) A good is a luxury.
B) People have a lot of time to shop around.
C) The time frame is very short.
D) Consumers have many other options.

Question 29

Demand is likely to be inelastic for goods that:

A) require a large portion of consumers' income.
B) are addictive.
C) are luxury items.
D) can be purchased after a longer time period.

Question 30

When the price of pickles increases by 10 percent, the quantity demanded of pickles decreases by 10 percent. The demand for pickles is:

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

Question 31

If the price of a good changes and the change in the quantity demanded is proportional to that price change, the good has a _____ demand.

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

Question 32

When the price of plane tickets to Ireland increases by 20 percent, the quantity demanded of plane tickets to Ireland decreases by 10 percent. Tickets to Ireland are:

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

Question 33

Households typically pay a large share of their income on housing. An economist would expect the demand for housing to be:

A) unit elastic.
B) elastic.
C) inelastic.
D) equal to zero.

Question 34

Akna is buying concert tickets at the last minute. The value of her elasticity of demand is most likely to be:

A) less than 1.
B) equal to 1.
C) greater than 1.
D) equal to 0.

Question 35

When the price of flowers decreases by 20 percent, Anarosa buys 10 percent more flowers. Anarosa's price elasticity of demand is equal to _____, and her demand is:

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

Question 36

When the price of magazines decreases by 10 percent, Efrain buys 10 percent more magazines. Efrain's price elasticity of demand is equal to _____, and his demand is:

A) 1; inelastic.
B) 10; elastic.
C) 10; inelastic.
D) 1; unit elastic.

Question 37

When the price of sneakers decreases by 10 percent, Anaiah buys 40 percent more flowers. Anaiah's price elasticity of demand is equal to _____, and his demand is:

A) 0.25; inelastic.
B) 4; unit elastic.
C) 4; elastic.
D) 2; inelastic.

Question 38

Total revenue is the:

A) same as profit.
B) total amount of money that a firm receives from selling a good.
C) total amount of money that a firm receives from selling a good minus what it costs to produce that good.
D) same as the price of a good.

Question 39

Gerald sells 10 faucets at a price of $20 each. It costs him $15 to produce each faucet. What is Gerald's total revenue?

A) $200
B) $100
C) $150
D) $50

Question 40

The total amount of money that a firm receives from selling a good is its:

A) profit.
B) demand.
C) total revenue.
D) marginal revenue.

Question 41

If consumers' sensitivity to price changes makes demand elastic, then a price decrease leads to:

A) an increase in supply.
B) an increase in total revenue.
C) a decrease in total revenue.
D) a decrease in supply.

Question 42

When Charles lowers the price of cheese plates by 25 percent, the quantity demanded increases by 50 percent. The demand for cheese plates is _____, and Charles' total revenue _____ as a result of the price change.

A) elastic; increases
B) inelastic; decreases
C) elastic; decreases
D) inelastic; increases

Question 43

When Jane raises the price of haircuts by 10 percent, the quantity demanded decreases by 5 percent. The demand for haircuts is _____, and Jane's total revenue _____ as a result of the price change.

A) elastic; increases
B) inelastic; decreases
C) elastic; decreases
D) inelastic; increases

Question 44

When Dave raises the price of smart watches by 10 percent, the quantity demanded decreases by 30 percent. The demand for smart watches is _____, and Dave's total revenue _____ as a result of the price change.

A) elastic; increases
B) inelastic; decreases
C) elastic; decreases
D) inelastic; increases

Question 45

Sinead raises the price of the combo meals that she sells by 30 percent, and as a result the quantity demanded of combo meals decreases by 15 percent. The demand for combo meals is _____, and Sinead's total revenue _____ as a result of the price change.

A) elastic; increases
B) inelastic; decreases
C) elastic; decreases
D) inelastic; increases

Question 46

A seller wants to increase its total revenue and decides to increase its price to do so. This seller thinks that the demand for its good is:

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

Question 47

Astra increases the price of her good by 10 percent, but her total revenue does not change. What kind of demand does Astra have for her good?

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

Question 48

Good X has few close substitutes and makes up a small share of a buyer's income. The demand for good X is _____ , and a seller of good X that wants to increase total revenue should _____ price.

A) unit elastic; increase
B) inelastic; increase
C) elastic; decrease
D) elastic; increase

Question 49

People who buy good Z are typically in a hurry when they buy it. Good Z has _____ demand, and if the seller increases the price of good Z, its total revenue will:

A) unit elastic; not change.
B) inelastic; increase.
C) elastic; increase.
D) inelastic; decrease.

Question 50

Use the table Price Elasticities of Demand for Four Goods I. If the price of each of these goods increases, which good will have no change in the amount of total revenue earned from selling it?
​

A) ice cream
B) boba tea
C) funnel cakes
D) curly fries

Question 51

Use the table Price Elasticities of Demand for Four Goods. If the seller of each good lowers the price by a given percentage, which good(s) will generate more total revenue?
​

A) ice cream, boba tea, and funnel cakes
B) only ice cream
C) ice cream, funnel cakes, and curly fries
D) curly fries and funnel cakes

Question 52

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. If Paola wants to increase total revenue, for which good should she increase the price, and for which goods should she decrease the price?

A) Decrease the price of magic pens, and increase the price of all other goods.
B) Decrease the price of 3-D printers and magic pens, and increase the price of maker carts and filament.
C) Decrease the price of 3-D printers and filament, and increase the price of the maker cart.
D) Decrease the price of 3-D printers and maker carts, and increase the price of filament.

Question 53

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. Total revenue decreases for which of the following goods if she lowers the price?
​

A) 3-D printer
B) maker cart
C) magic pen
D) filament

Question 54

Profit is the:

A) total amount of money a firm takes in.
B) difference between total revenue and total costs.
C) difference between the price of a good and its total revenue.
D) total amount of sales a firm has.

Question 55

If consumers demand the same quantity of a good regardless of the price, the demand for that good is:

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

Question 56

A demand curve that is vertical has:

A) perfectly inelastic demand.
B) perfectly elastic demand.
C) unit elastic demand.
D) total elasticity.

Question 57

(Use Figure: A Demand Curve) Use the figure A Demand Curve. What kind of demand does this good have?
​
Figure: A Demand Curve

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

Question 58

What is the value of the price elasticity of demand for a good that has a perfectly inelastic demand?

A) 1
B) -1
C) 10
D) 0

Question 59

Perfectly elastic demand curves are:

A) vertical.
B) horizontal.
C) upward sloping.
D) downward sloping.

Question 60

If any price increase causes the quantity demanded to fall to zero, the demand for that good is:

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

Question 61

Perfectly inelastic demand curves are:

A) vertical.
B) horizontal.
C) upward sloping.
D) downward sloping.

Question 62

What happens to total revenue if the price is increased for a good with perfectly elastic demand?

A) It increases dramatically.
B) It decreases slightly.
C) It stays the same.
D) It falls to zero.

Question 63

Ray is one of many sellers of furniture in a large city that has many furniture stores. If he tries to raise the price of a sofa even slightly, he loses all of his business to one of his competitors. The demand for Ray's sofas is:

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

Question 64

What is true about price elasticity of demand along a straight, downward-sloping demand curve?

A) Elasticity never changes.
B) The price elasticity of demand is elastic on the left end of the curve and is inelastic on the right end of the curve.
C) The price elasticity of demand is inelastic on the left end of the curve and is elastic on the right end of the curve.
D) Elasticity starts at zero and increases as you move from left to right along the demand curve.

Question 65

When demand is a downward-sloping straight line, at what point does the price elasticity of demand equal zero?

A) at the point where the demand curve intersects the horizontal axis
B) at every point along the demand curve
C) at the midpoint of the demand curve
D) at the point where the demand curve intersects the vertical axis

Question 66

What happens to the price elasticity of demand as price increases and you move from right to left along a demand curve?

A) It starts low and increases as you move from right to left.
B) It starts low, at first increases, but then decreases after you cross the midpoint of the demand curve.
C) It starts high and decreases as you move from right to left.
D) It starts high, at first decreases, but then increases after you cross the midpoint of the demand curve.

Question 67

A measure of how responsive firms are to changes in the price of the good that they are selling is:

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

Question 68

The percentage change in quantity supplied in response to the percentage change in price is the:

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

Question 69

The price elasticity of supply depends on:

A) what share of income consumers spend on it.
B) whether goods are complements or substitutes.
C) whether goods are normal or inferior.
D) what the cost of supplying additional units of a good is.

Question 70

Seamus sells 100 party hats when the price of party hats is $10 and sells 120 party hats when the price of party hats is $15. Seamus's price elasticity of supply is:

A) perfectly elastic.
B) equal to 0.455.
C) equal to 2.2.
D) perfectly inelastic.

Question 71

If an economist wants to know how a change in the price of one good affects the quantity demanded of another good, she would use the:

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

Question 72

The cross-price elasticity of demand is a measure of how responsive the:

A) quantity demanded of a good is to a change in its own price.
B) price of one good affects the quantity demanded of another.
C) quantity demanded of a good is to a change in consumers' income.
D) sellers of a good are to a change in its price.

Question 73

If the cross-price elasticity of demand is equal to -0.5, it can be concluded that:

A) this good is inferior.
B) the two goods are complements.
C) the two goods are substitutes.
D) the good has many close substitutes.

Question 74

The cross-price elasticity of strawberries and blueberries is equal to 2. What can be concluded based on this information?

A) Both goods are normal goods.
B) Both goods are inferior goods.
C) The goods are complements.
D) The goods are substitutes.

Question 75

An increase in the price of one good leads to a decrease in the quantity demanded of the other good. The sign of this cross-price elasticity is _____, and the two goods are:

A) negative; complements.
B) negative; substitutes.
C) positive; complements.
D) positive; substitutes.

Question 76

When the price of good X increases by 20 percent, the quantity demanded of good Y increases by 40 percent. The cross-price elasticity of demand is equal to _____, and these goods are:

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

Question 77

If an economist wants to know if two goods are complements or substitutes, which is the appropriate elasticity to calculate?

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

Question 78

A 1 percent increase in the price of good W results in a 3 percent increase in the quantity demanded of good T. What is the cross-price elasticity of demand, and what kinds of goods are they?

A) 3; complements
B) ; normal goods
C) 3; substitutes
D) ; inferior goods

Question 79

The sign of the cross-price elasticity of demand:

A) indicates whether two goods are complements or substitutes.
B) indicates whether a good is normal or inferior.
C) is always positive.
D) is always negative, but the sign is customarily dropped for convenience.

Question 80

A good that a consumer always buys more of when income increases is:

A) a complement.
B) a substitute.
C) an inferior good.
D) a normal good.