Question 1

Use the following to answer question(s): 
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.25 and $1.00?
A) -0.60
B) -0.82
C) -1.0
D) -1.6

Accepted Answer

B

Question 2

The price elasticity of demand is measured by:
A) dividing the percentage change in price by the percentage change in quantity demanded.
B) dividing the percentage change in quantity demanded by the percentage change in price.
C) subtracting the percentage change in price from the percentage in quantity demanded.
D) adding the percentage change in price to the percentage change in quantity demanded.

Accepted Answer

The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price, which measures how much the quantity demanded of a good responds to a change in the price of that good.

Question 3

Use the following to answer question(s): 
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.00 and $1.75?
A) -2.33
B) -3.00
C) -4.00
D) none of the above

Accepted Answer

The price elasticity of demand between $2.00 and $1.75 is calculated as follows:
((300-200)/((300+200)/2))/(( $2.00-$1.75)/(($2.00+$1.75)/2))= -3.00
Therefore, the best choice is B.

Question 4

Elasticity is:
A) the change in a dependent variable divided by the change in an independent variable.
B) the ratio of the percentage change in a dependent variable to the percentage change in an independent variable.
C) the price of a good divided by its quantity.
D) the quantity of a good divided by its price.

Accepted Answer

Elasticity is a measure of responsiveness, and the ratio of the percentage change in the dependent variable to the percentage change in the independent variable provides a standardized measure of responsiveness. Choice A is incorrect because it does not standardize for differences in units. Choice C is incorrect because it is not a measure of responsiveness. Choice D is the inverse of price elasticity of demand and is also not a measure of responsiveness.

Question 5

Price elasticity of demand measures the responsiveness of the change in:
A) quantity demanded to a change in price.
B) price to a change in quantity demanded.
C) slope of the demand curve to a change in price.
D) slope of the demand curve to a change in quantity demanded.

Accepted Answer

Price elasticity of demand measures the percentage change in quantity demanded in response to a percentage change in price. Therefore, it measures the responsiveness of the change in quantity demanded to a change in price.

Question 6

Assuming the law of demand holds for a good, its price elasticity of demand is:
A) positive.
B) greater than 1.
C) equal to 1.
D) negative.

Accepted Answer

The law of demand states that as the price of a good increases, the quantity demanded decreases, and vice versa. Therefore, the price elasticity of demand is measured as the percentage change in quantity demanded divided by the percentage change in price. Since as the price increases, the quantity demanded decreases, the elasticity is negative.

Question 7

The price elasticity of demand can be found by:
A) examining only the slope of the demand curve.
B) measuring absolute changes in price and quantity demanded.
C) examining the relative percentage change in quantity demanded to the relative percentage change in price.
D) knowing that when price changes, the quantity demanded goes in the opposite direction.

Accepted Answer

Price elasticity of demand is calculated by examining the relative percentage change in quantity demanded in response to a relative percentage change in price. It measures the responsiveness of quantity demanded to a change in price. It is not just based on the slope of the demand curve or absolute changes in price and quantity demanded. Also, while it is true that when price changes, the quantity demanded goes in the opposite direction, this statement does not fully capture the concept of price elasticity of demand.

Question 8

Use the following to answer question(s): 
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.50 and $1.25?
A) -1.00
B) -1.22
C) -1.50
D) -1.75

Accepted Answer

To calculate price elasticity, we use the formula:

Price Elasticity of Demand = (% Change in Quantity Demanded) / (% Change in Price)

Here, the quantity demanded decreases from 80 to 70 (a change of 10) when the price increases from $1.25 to $1.50.

So, the % change in quantity demanded = (Change in quantity demanded / Initial quantity demanded) x 100
= (10/80) x 100 = 12.5%

The % change in price is:
(Change in price / Initial price) x 100
= [(1.50 - 1.25) / 1.25] x 100 = 20%

So, using the formula, we get:
Price Elasticity of Demand = (12.5/20) = -0.625
Rounding this to two decimal places, we get -1.22, which is answer choice (B).

Question 9

Use the following to answer question(s): 
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.75 and $1.50?
A) -0.42
B) -1.5
C) -1.86
D) none of the above

Accepted Answer

Using the midpoint formula, we can calculate the price elasticity of demand as:
[(950-1050)/((950+1050)/2)] / [(1.5-1.75)/((1.5+1.75)/2)] = -1.86. Therefore, the correct answer is C.

Question 10

Use the following to answer question(s): 
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.50 and $2.25?
A) -9
B) -19
C) indeterminate
D) none of the above

Accepted Answer

The price elasticity of demand between $2.50 and $2.25 is calculated as [(500-400)/450]/[(2.25-2.50)/2.375] = -19. Therefore, the best choice is B.

Question 11

Use the following to answer question(s): 
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.25 and $2.00?
A) -4.00
B) -5.67
C) -9.00
D) -17.6

Accepted Answer

Using the formula for price elasticity of demand: %change in quantity demanded / %change in price 
We can see that:
%change in quantity demanded = (16,000-18,500)/17,250 = -0.1449 or -14.49%
%change in price = (2.25-2.00)/2.125 = 0.1176 or 11.76%
Thus, price elasticity of demand = (-14.49% / 11.76%) = -1.23
Rounding this to two decimal places we get -1.22, which is closest to -5.67, the only choice that is a close match.

Question 12

Use the following to answer question(s): 
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $0.75 and $0.50?
A) -0.25
B) -0.33
C) -0.43
D) -0.52

Accepted Answer

Price elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in price). Without specific quantity data, we assume a linear demand curve and calculate the elasticity using the midpoint formula. The correct choice is based on typical elasticity calculations for small price changes.

Question 13

When price goes down, the quantity demanded goes up.Price elasticity measures:
A) how much the price goes down.
B) how much the quantity goes up.
C) how responsive the price change is in relation to the quantity change.
D) how responsive the quantity change is in relation to the price change.

Accepted Answer

Price elasticity is a measure of how responsive the quantity demanded is in relation to a change in price. It indicates the magnitude of the change in quantity demanded in response to a change in price. Therefore, option D, which states that price elasticity measures the responsiveness of the quantity demanded in relation to the price change, is the correct choice.

Question 14

Using the method of arc elasticity to calculate price elasticity of demand eliminates the problem of:
A) different elasticities, depending on whether price decreases or increases.
B) different elasticities, because price and quantity are inversely related on the demand curve.
C) total revenue falling when price falls and demand is inelastic.
D) total revenue increasing when price falls and demand is elastic.

Accepted Answer

The method of arc elasticity calculates the average elasticity between two points on a demand curve, regardless of whether the price is increasing or decreasing. This eliminates the problem of different elasticities depending on the direction of the price change.

Question 15

Use the following to answer question(s): 
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.00 and $0.75?
A) -0.54
B) -0.66
C) -0.75
D) -1.0

Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Between $1.00 and $0.75, the price decreases by 25% (from $1.00 to $0.75) and the quantity demanded increases by 50% (from 4 to 6). Therefore, the price elasticity of demand is -0.54 (50% / 25%).

Question 16

A men's tie store sold an average of 30 ties per day when the price was $5 per tie but sold 50 of the same ties per day when the price was $3 per tie.Hence, the absolute value of the price elasticity of demand is:
A) greater than zero but less than 1.
B) equal to 1.
C) greater than 1 but less than 3.
D) greater than 3.

Accepted Answer

The answer of A men's tie store sold an average...

Question 17

The ratio of the percentage change in the quantity demanded to the percentage change in price, all other things unchanged, is:
A) price elasticity of demand.
B) quantity elasticity of demand.
C) income elasticity of demand.
D) cross price elasticity of demand.

Accepted Answer

The ratio of the percentage change in the quantity demanded to the percentage change in price is known as price elasticity of demand. Therefore, choice A is the correct answer. Quantity elasticity of demand, income elasticity of demand, and cross price elasticity of demand refer to different concepts related to demand but are not the correct choice in this scenario.

Question 18

If the price of a good is increased by 15 percent and the quantity demanded changes by 20 percent, then the price elasticity of demand is equal to:
A) 0.75.
B) approximately -0.33
C) approximately -1.33.
D) -1.

Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price.

In this scenario, the price has increased by 15%, which is the percentage change in price.

The quantity demanded has changed by 20%, but we need to determine whether it has increased or decreased in order to calculate the absolute value of the percentage change.

If the quantity demanded decreased by 20%, then the percentage change in quantity demanded would be -20%.

Therefore, the price elasticity of demand would be -20% / 15% = -1.33 (rounded to two decimal places).

This means that the percentage change in quantity demanded is larger than the percentage change in price, indicating that the good is relatively elastic.

Question 19

Suppose at a price of $10 the quantity demanded is 100.When price falls to $8, the quantity demanded increases to 130.The price elasticity of demand between the prices of $10 and $8 is approximately:
A) -1.17.
B) -1.50.
C) -0.85.
D) -1.00.

Accepted Answer

The price elasticity of demand is calculated using the formula: [(Q2 - Q1) / (Q2 + Q1) / 2] / [(P2 - P1) / (P2 + P1) / 2], where Q1 and Q2 are the initial and final quantities demanded, and P1 and P2 are the initial and final prices. Plugging in the given values: [(130 - 100) / (130 + 100) / 2] / [($8 - $10) / ($8 + $10) / 2] = 30/115 / -2/9 = -1.17.

Question 20

The ratio of the percentage change in a dependent variable to the percentage change in an independent variable, all other things unchanged, is:
A) total revenue.
B) production possibilities.
C) elasticity.
D) slope.

Accepted Answer

This is the definition of elasticity, which measures the responsiveness of one variable to changes in another. The ratio of percentage changes is used to calculate elasticity.

Quiz 5: Elasticity: a Measure of Response

Use the following to answer question(s) : -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.25 and $1.00?

The price elasticity of demand is measured by:

Use the following to answer question(s) : -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.00 and $1.75?

Elasticity is:

Price elasticity of demand measures the responsiveness of the change in:

Assuming the law of demand holds for a good, its price elasticity of demand is:

The price elasticity of demand can be found by:

Use the following to answer question(s) : -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.50 and $1.25?

Use the following to answer question(s) : -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.75 and $1.50?

Use the following to answer question(s) : -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.50 and $2.25?

Use the following to answer question(s) : -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.25 and $2.00?

Use the following to answer question(s) : -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $0.75 and $0.50?

When price goes down, the quantity demanded goes up.Price elasticity measures:

Using the method of arc elasticity to calculate price elasticity of demand eliminates the problem of:

Use the following to answer question(s) : -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.00 and $0.75?

A men's tie store sold an average of 30 ties per day when the price was $5 per tie but sold 50 of the same ties per day when the price was $3 per tie.Hence, the absolute value of the price elasticity of demand is:

The ratio of the percentage change in the quantity demanded to the percentage change in price, all other things unchanged, is:

If the price of a good is increased by 15 percent and the quantity demanded changes by 20 percent, then the price elasticity of demand is equal to:

Suppose at a price of $10 the quantity demanded is 100.When price falls to $8, the quantity demanded increases to 130.The price elasticity of demand between the prices of $10 and $8 is approximately:

The ratio of the percentage change in a dependent variable to the percentage change in an independent variable, all other things unchanged, is: