Question 1

At the midpoint of a straight-line demand curve, the price elasticity of demand is:

Accepted Answer

Along a straight-line demand curve, the price elasticity of demand at the midpoint is always equal to one.

Question 2

Refer to the accompanying graph. What is the price elasticity of demand when the price of rice is $3 per pound?

Accepted Answer

The formula for the price elasticity of demand at a given point is (P/Q)× (1/slope). Here, (3/4)× (2/3)= 0.5.

Question 3

Refer to the accompanying figure. At P = 8 and Q = 4, D1 is ________ elastic than D2, which is shown graphically as D1 being ________ D2.

Accepted Answer

At any given price and quantity, a steeper demand curve is a less elastic demand curve.

Question 4

Refer to the accompanying figure. At P = 4, how does the price elasticity of demand for D1 compare to that for D2?

Accepted Answer

The formula for the price elasticity of demand at a given point is (P/Q)× (1/slope). For D1, at a price of 4, (4/6)× (1/2)= 1/3, and for D2, at a price of 4, (4/12)× (1/0.5)= 2/3. So, at P = 4, the price elasticity of demand is lower for D1 than D2.

Question 5

As one moves down along a linear demand curve (i.e., from high price, low quantity pairs to low price, high quantity pairs), demand:

Accepted Answer

Consider the formula for the price elasticity of demand: (P/Q)× (1/slope). As you move down along a linear demand curve, slope stays the same but (P/Q)falls, implying that demand is becoming less elastic.

Question 6

Suppose two demand curves intersect and so have a point in common. At that point, demand shown by the steeper curve will be ________ the flatter curve.

Accepted Answer

At any given price, the steeper the demand curve is, the less elastic demand will be.

Question 7

Suppose the price P on a given demand curve results in a price elasticity of demand equal to 1. Any price higher than P will lie on the ________ part of the demand curve, and any price lower than P will lie on the ________ part of the demand curve.

Accepted Answer

Along a straight-line demand curve, the price elasticity of demand at the midpoint equals one. At higher prices, demand is elastic with respect to price, and at lower prices demand is inelastic with respect to price.

Question 8

Refer to the accompanying figure. The absolute value of the slope of the demand curve D1 is ________, and the absolute value of the slope of demand curve D2 is ________.

Accepted Answer

Slope is the rise over the run.

Question 9

The price elasticity of demand equals 1:

Accepted Answer

Along a straight-line demand curve, the price elasticity of demand at the midpoint is always equal to 1.

Question 10

Refer to the accompanying figure. When P = 4, the price elasticity of demand for the demand curve D1 is ________ and D2 is ________.

Accepted Answer

The formula for the price elasticity of demand at a given point is (P/Q)× (1/slope). For D1, at a price of 4, (4/6)× (1/2)= 1/3, and for D2, at a price of 4 (4/12)× (1/0.5)= 2/3.

Question 11

The accompanying graph depicts demand.   The price elasticity of demand at point D is:

Accepted Answer

The formula for the price elasticity of demand at a given point is (P/Q)× (1/slope). Here, (2/10)× (1/0.5)= 2/5.

Question 12

If consumers completely cease purchasing a product when its price increases by any amount, then demand is:

Accepted Answer

Demand along a horizontal demand curve is perfectly elastic.

Question 13

Refer to the accompanying graph. What is the price elasticity of demand at point A?

Accepted Answer

Given this demand curve (P = 8 - 0.5Qᵈᴾ⁼⁸⁻⁰.⁵Qᵈ ), it is possible to show that a quantity of 4 (in thousands), corresponds to a price of $6.  The formula for the price elasticity of demand is (P/Q)×  (1/|slope|).  So in this case, the price elasticity of demand is (6/4)×  (1/|0.5|)= 3.

Question 14

Refer to the accompanying figure. For demand curve D1, what is the price elasticity of demand when P = 12?

Accepted Answer

The formula for the price elasticity of demand at a given point is (P/Q)× (1/slope). Here, (12/2)× (1/2)= 3.

Question 15

If the demand curve is horizontal, then demand is:

Accepted Answer

A horizontal demand curve has an infinite price elasticity of demand, implying that demand is perfectly elastic.

Question 16

On a given linear demand curve, as price increases demand becomes:

Accepted Answer

Consider the formula for the price elasticity of demand: (P/Q)× (1/slope). As price increases (and quantity falls), (P/Q)will rise, and since slope is constant along a linear demand curve, this implies that the elasticity of demand is increasing. That is, demand is becoming more elastic.

Question 17

The accompanying graph depicts demand.    At point D, demand is:

Accepted Answer

The formula for the price elasticity of demand at a given point is (P/Q)× (1/slope). Here, (2/10)× (1/0.5)= 2/5. Since this is less than one, demand is inelastic at point D.

Question 18

Refer to the accompanying figure. When the price is equal to 8, the price elasticity of demand for the demand curve D1 is ________ and for D2 the price elasticity of demand is ________.

Accepted Answer

The formula for the price elasticity of demand at a given point is (P/Q)× (1/slope). For D1, at a price of 8, (8/4)× (1/2)= 1, and for D2. at a price of 8, (8/4)× 2 = 4.

Question 19

Refer to the accompanying figure. What is the price elasticity of demand when the price of rice is $6 per pound?

Accepted Answer

The formula for the price elasticity of demand at a given point is (P/Q)× (1/slope). Here, (6/2)× (2/3)= 2.

Question 20

The accompanying graph depicts demand.  The price elasticity of demand at point C is:

Accepted Answer

The formula for the price elasticity of demand at a given point is (P/Q)× (1/slope). Here, (3/8)× (1/0.5)= 3/4.

Quiz 4: Elasticity

At the midpoint of a straight-line demand curve, the price elasticity of demand is:

Refer to the accompanying graph. What is the price elasticity of demand when the price of rice is $3 per pound?

Refer to the accompanying figure. At P = 8 and Q = 4, D1 is elastic than D2, which is shown graphically as D1 being D2.

Refer to the accompanying figure. At P = 4, how does the price elasticity of demand for D1 compare to that for D2?

As one moves down along a linear demand curve (i.e., from high price, low quantity pairs to low price, high quantity pairs) , demand:

Suppose two demand curves intersect and so have a point in common. At that point, demand shown by the steeper curve will be ________ the flatter curve.

Suppose the price P on a given demand curve results in a price elasticity of demand equal to 1. Any price higher than P will lie on the part of the demand curve, and any price lower than P will lie on the part of the demand curve.

Refer to the accompanying figure. The absolute value of the slope of the demand curve D1 is , and the absolute value of the slope of demand curve D2 is .

The price elasticity of demand equals 1:

Refer to the accompanying figure. When P = 4, the price elasticity of demand for the demand curve D1 is and D2 is .

The accompanying graph depicts demand. The price elasticity of demand at point D is:

If consumers completely cease purchasing a product when its price increases by any amount, then demand is:

Refer to the accompanying graph. What is the price elasticity of demand at point A?

Refer to the accompanying figure. For demand curve D1, what is the price elasticity of demand when P = 12?

If the demand curve is horizontal, then demand is:

On a given linear demand curve, as price increases demand becomes:

The accompanying graph depicts demand. At point D, demand is:

Refer to the accompanying figure. When the price is equal to 8, the price elasticity of demand for the demand curve D1 is and for D2 the price elasticity of demand is .

Refer to the accompanying figure. What is the price elasticity of demand when the price of rice is $6 per pound?

The accompanying graph depicts demand. The price elasticity of demand at point C is: