Question 1

If the quantity demanded changes by an infinitely large amount for a given change in price, then demand is
A) perfectly inelastic.
B) perfectly elastic.
C) elastic.
D) inelastic.

Accepted Answer

Demand is perfectly elastic when the quantity demanded changes by an infinitely large amount for a given change in price.

Question 2

The demand for movies is unit elastic if
A) a 5 percent decrease in the price leads to an infinite increase in the quantity demanded.
B) a 5 percent increase in the price leads to a 5 percent decrease in the quantity demanded.
C) any increase in the price leads to a 1 percent decrease in the quantity demanded.
D) a 5 percent increase in the price leads to a 5 percent increase in total revenue.

Accepted Answer

Unit elastic demand means that the percentage change in quantity demanded is equal to the percentage change in price, resulting in no change in total revenue.

Question 3

If the demand for a good is perfectly elastic, the price elasticity of demand is ________ and the demand curve is ________.
A) infinite; vertical
B) zero; vertical
C) zero; horizontal
D) infinite; horizontal

Accepted Answer

If the demand for a good is perfectly elastic, the price elasticity of demand is infinite, and the demand curve is horizontal, indicating that consumers will only buy at one price and any change in price will result in zero quantity demanded.

Question 4

"Last October, due to an early frost, the price of a pumpkin increased by 10 percent compared to the price in the previous Halloween seasons. As a result, the quantity demanded county-wide decreased from 2 million to 1.5 million." Based on this statement, the
A) demand for pumpkins is elastic.
B) demand for pumpkins is inelastic.
C) demand for pumpkins is unit elastic.
D) demand curve for pumpkins shifted rightward.

Accepted Answer

The demand for pumpkins is elastic because the percentage decrease in quantity demanded (25%) is greater than the percentage increase in price (10%).

Question 5

If the demand for a good is elastic, the price elasticity of demand is
A) greater than 1.
B) equal to 1.
C) between 0 and 1.
D) less than zero.

Accepted Answer

When demand is elastic, the price elasticity of demand is greater than 1, indicating that the quantity demanded is highly responsive to price changes.

Question 6

If the price elasticity of demand for peanut butter is 2.4, then peanut butter
A) has an elastic demand.
B) has an inelastic demand.
C) has a unit elastic demand.
D) is a normal good.

Accepted Answer

The price elasticity of demand greater than 1 indicates that the demand is elastic, meaning consumers are responsive to price changes.

Question 7

-The demand curve in the figure above illustrates a product whose demand has a price elasticity of demand equal to
A) zero at all prices.
B) infinity.
C) one at all prices.
D) a different amount at different prices.

Accepted Answer

The demand curve is a vertical line, which means that the quantity demanded does not change with price. This means that the price elasticity of demand is infinity.

Question 8

If the demand curve is a downward sloping straight line, the price elasticity of demand always
A) increases as the demand curve shifts rightward.
B) increases as the demand curve shifts leftward.
C) increases with movements upward along the demand curve.
D) decreases with movements upward along the demand curve.

Accepted Answer

The price elasticity of demand increases with movements upward along a downward sloping straight line demand curve because the percentage change in quantity demanded becomes larger relative to the percentage change in price as price increases.

Question 9

-In the above figure, which demand curve illustrates perfectly elastic demand?
A) G
B) H
C) I
D) J

Accepted Answer

The answer of 
-In the above figure, which demand curve...

Question 10

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

Accepted Answer

The demand curve is a vertical line, which means that the quantity demanded does not change at all as the price changes. This means that the price elasticity of demand is zero at all prices.

Question 11

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

Accepted Answer

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

Question 12

If the price elasticity of demand for gasoline is 0.8 and the price elasticity of demand for plane tickets is 2.2 then the demand for gasoline is ________ and the demand for plane tickets is ________.
A) elastic; inelastic
B) inelastic; elastic
C) elastic; elastic
D) inelastic; inelastic

Accepted Answer

The demand for gasoline is inelastic because its price elasticity of demand is less than 1 (0.8), indicating that quantity demanded is not very responsive to price changes. The demand for plane tickets is elastic because its price elasticity of demand is greater than 1 (2.2), indicating that quantity demanded is very responsive to price changes.

Question 13

If the demand curve for oranges is a downward sloping straight line, the price elasticity of demand will increase the
A) higher the price of oranges.
B) higher the price of other fruits.
C) higher the income level of consumers.
D) lower the price of oranges.

Accepted Answer

As the price of oranges increases along a downward sloping demand curve, the price elasticity of demand becomes more elastic because the percentage change in quantity demanded becomes larger relative to the percentage change in price.

Question 14

A good with a horizontal demand curve has a demand
A) with an income elasticity of demand equal to 0.
B) with a price elasticity of demand equal to 0.
C) with a price elasticity of demand equal to infinity.
D) for which there are no substitutes.

Accepted Answer

A horizontal demand curve indicates that the quantity demanded is extremely sensitive to price changes, meaning the price elasticity of demand is infinite.

Question 15

Unit elastic demand means that the
A) ratio of a change in the quantity demanded to a change in the price equals 1.
B) ratio of a percentage change in the quantity demanded to a percentage change in the price equals 1.
C) demand curve is vertical.
D) demand curve is horizontal.

Accepted Answer

Unit elastic demand means that the percentage change in quantity demanded is exactly equal to the percentage change in price, resulting in an elasticity of 1.

Question 16

If the price elasticity of demand for airline travel is 0.52 in the short run and 1.46 in the long run, then the demand for airline travel is ________ in the short run and ________ in the long run.
A) elastic; elastic
B) elastic; inelastic
C) inelastic; elastic
D) inelastic; inelastic

Accepted Answer

In the short run, the price elasticity of demand is 0.52, which is less than 1, indicating inelastic demand. In the long run, the elasticity is 1.46, which is greater than 1, indicating elastic demand.

Question 17

Freezing temperatures in California have sharply reduced the supply of oranges in the U.S. You predict that the price of oranges will ________, and the more elastic the demand for oranges, the ________ will be the effect on the price.
A) fall; smaller
B) fall; greater
C) rise; smaller
D) rise; greater

Accepted Answer

The answer of Freezing temperatures in California have sharply reduced...

Question 18

When the demand for a good is perfectly elastic
A) total revenue is as large as possible.
B) the demand curve for the good is vertical.
C) the price elasticity of demand is infinite.
D) the price elasticity of demand is zero.

Accepted Answer

When demand is perfectly elastic, consumers will only buy at one price, and any change in price will result in zero quantity demanded, making the price elasticity of demand infinite.

Question 19

Demand is price elastic if a
A) relatively large price increase leads to a relatively small decrease in the quantity demanded.
B) relatively small price increase leads to a relatively large decrease in the quantity demanded.
C) price increase leads to a decrease in the quantity demanded.
D) price increase leads to an increase in the quantity demanded.

Accepted Answer

Demand is price elastic if a relatively small price increase leads to a relatively large decrease in the quantity demanded.

Question 20

If the elasticity of demand for peaches is 1.76 and the elasticity of demand for apples is 1.59, then consumers are
A) more sensitive to a change in the price of peaches than they are to a change in the price of apples.
B) less sensitive to a change in the price of peaches than they are to a change in the price of apples.
C) more sensitive to a change in the quantity of peaches than they are to a change in the quantity of apples.
D) less sensitive to a change in the quantity of peaches than they are to a change in the quantity of apples.

Accepted Answer

Elasticity of demand measures how sensitive consumers are to price changes. A higher elasticity value indicates greater sensitivity. Since the elasticity of demand for peaches (1.76) is higher than for apples (1.59), consumers are more sensitive to price changes for peaches.

Quiz 4: Elasticity

If the quantity demanded changes by an infinitely large amount for a given change in price, then demand is

The demand for movies is unit elastic if

If the demand for a good is perfectly elastic, the price elasticity of demand is and the demand curve is .

"Last October, due to an early frost, the price of a pumpkin increased by 10 percent compared to the price in the previous Halloween seasons. As a result, the quantity demanded county-wide decreased from 2 million to 1.5 million." Based on this statement, the

If the demand for a good is elastic, the price elasticity of demand is

If the price elasticity of demand for peanut butter is 2.4, then peanut butter

-The demand curve in the figure above illustrates a product whose demand has a price elasticity of demand equal to

If the demand curve is a downward sloping straight line, the price elasticity of demand always

-In the above figure, which demand curve illustrates perfectly elastic demand?

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

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

If the price elasticity of demand for gasoline is 0.8 and the price elasticity of demand for plane tickets is 2.2 then the demand for gasoline is and the demand for plane tickets is .

If the demand curve for oranges is a downward sloping straight line, the price elasticity of demand will increase the

A good with a horizontal demand curve has a demand

Unit elastic demand means that the

If the price elasticity of demand for airline travel is 0.52 in the short run and 1.46 in the long run, then the demand for airline travel is in the short run and in the long run.

Freezing temperatures in California have sharply reduced the supply of oranges in the U.S. You predict that the price of oranges will , and the more elastic the demand for oranges, the will be the effect on the price.

When the demand for a good is perfectly elastic

Demand is price elastic if a

If the elasticity of demand for peaches is 1.76 and the elasticity of demand for apples is 1.59, then consumers are