Question 1

Refer to the following graphs to answer the  questions.
Graph A
Graph B
Graph C
Graph D
Graph E
-Which of these graphs most likely depicts a price elasticity of demand of -0.2?
A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Accepted Answer

The answer of Refer to the following graphs to answer...

Question 2

Refer to the following graphs to answer the  questions.
Graph A
Graph B
Graph C
Graph D
Graph E
-Which of these graphs represents relatively price elastic demand for a good?
A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Accepted Answer

The answer of Refer to the following graphs to answer...

Question 3

Refer to the accompanying table. When the price drops from $5 to $3, price elasticity of demand for sushi (using the midpoint method) at an income of $30,000 is: $$\begin{array} { | l | l | l | } 
\hline \begin{array} { l } 
\text { Price } \
\text { (per roll) }
\end{array} & \begin{array} { l } 
\text { Quantity Demanded } \
\text { (income } \
\$ 10,000 / \text { year) }
\end{array} & \begin{array} { l } 
\text { Quantity Demanded } \
\text { (income = } \
\$ 30,000 / \text { year) }
\end{array} \
\hline \$ 1 & 5 & 9 \
\hline \$ 2 & 4 & 8 \
\hline \$ 3 & 3 & 7 \
\hline \$ 4 & 2 & 6 \
\hline \$ 5 & 1 & 5 \
\hline
\end{array}$$
A) 0.71.
B) 0.67.
C) 0.10.
D) 0.33.
E) -0.67.

Accepted Answer

The answer of Refer to the accompanying table. When the...

Question 4

Cellphone companies found that when they raised the price of connecting to wireless hot spots, demand decreased more than proportionally among casual users but decreased less than proportionally among businesspeople. This is because wireless connectivity is a(n) for casual users but a(n) for businesspeople.
A) elastic good; inelastic good
B) luxury good; necessity good
C) normal good; inferior good
D) inelastic good; elastic good
E) inferior good; normal good

Accepted Answer

The scenario describes a situation where price elasticity of demand is greater for casual users (more responsive to price changes) than for businesspeople. This means that wireless connectivity is an elastic good for casual users (small changes in price lead to large changes in demand) and an inelastic good for businesspeople (large changes in price lead to small changes in demand).

Question 5

When would oil producers see the largest percentage decline in the quantity demanded for oil due to an increase in the price of oil today?
A) tomorrow
B) in 6 months
C) in 2 years
D) in 8 years
E) in 15 years

Accepted Answer

The largest percentage decline in the quantity demanded for oil due to an increase in the price of oil today would be seen in the long term (15 years in this case), as consumers and industries have more time to adjust their behaviors, invest in energy-efficient technologies, or switch to alternative energy sources.

Question 6

Refer to the following graphs to answer the  questions.
Graph A
Graph B
Graph C
Graph D
Graph E
-Which of these graphs most likely depicts a price elasticity of demand of -5?
A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Accepted Answer

Graph D shows a steep demand curve, indicating a high degree of price elasticity of demand. At higher prices, there is a significant decrease in quantity demanded. Hence, graph D depicts a price elasticity of demand of -5.

Question 7

Refer to the following graphs to answer the  questions.
Graph A
Graph B
Graph C
Graph D
Graph E
-Which of these graphs represents perfectly price inelastic demand for a good?
A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Accepted Answer

Graph A represents perfectly price inelastic demand because the quantity demanded remains constant even as the price changes.

Question 8

When the price elasticity of demand is elastic, a consumer is:
A) completely unresponsive to a change in price.
B) relatively unresponsive to a change in price.
C) unaffected by a change in price.
D) relatively responsive to a change in price.
E) completely responsive to a change in price.

Accepted Answer

When the price elasticity of demand is elastic, a consumer is relatively responsive to a change in price. This means that a small change in price would result in a relatively large change in the quantity demanded by the consumer.

Question 9

If a business finds that demand for its good is very price elastic, it knows that:
A) price is very important.
B) price is unimportant.
C) price is unrelated.
D) the effect of price is less important than the impact of the quantity consumers buy.
E) the quantity consumers buy is unimportant.

Accepted Answer

When demand is price elastic, it means that consumers are very sensitive to changes in price. Therefore, a lower price will result in a significant increase in demand, while a higher price will result in a significant decrease in demand. In this case, price becomes very important to maintain or increase demand for the good.

Question 10

When quantity demanded and price increase by 10%, you know that price and quantity are to the consumer.
A) equally important
B) everything
C) nothing
D) relatively important
E) relatively unimportant

Accepted Answer

The answer of When quantity demanded and price increase by...

Question 11

"No matter the price, I will always buy five gallons of ice cream a week. I love ice cream!" This statement reflects a price elasticity of demand that is:
A) perfectly elastic.
B) elastic.
C) unitary.
D) inelastic.
E) perfectly inelastic.

Accepted Answer

The statement indicates that the person is willing to buy the same quantity of ice cream (five gallons) regardless of the price, which means that the price elasticity of demand is perfectly inelastic. This also implies that the person does not consider the price of ice cream to be a significant factor in their purchasing decision.

Question 12

Kevin tells the manager at Moo's Ice Cream that he won't buy any ice cream cones costing more than $2, but he will buy a limitless number at any price less than $2. His price elasticity of demand for ice cream cones is:
A) perfectly inelastic.
B) inelastic.
C) unitary elastic.
D) elastic.
E) perfectly elastic.

Accepted Answer

Kevin's demand is perfectly elastic because he will only buy ice cream cones at prices below $2 and none at prices above $2, indicating an infinite sensitivity to price changes at the $2 threshold.

Question 13

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:
A) 0 (zero).
B) relatively small.
C) proportional to the shift in demand.
D) relatively large.
E) infinite.

Accepted Answer

Since demand for pencils has declined due to the popularity of digital alternatives, the equilibrium change in quantity demanded is expected to be relatively large. This is because the high price elasticity of demand for pencils means that even small changes in demand can cause relatively large changes in quantity demanded.

Question 14

The Sunny Softball league found that, when it changed its ticket prices from $10 to $5, there was a more than proportional but not infinite increase in attendance. The price elasticity of demand is:
A) perfectly inelastic.
B) inelastic.
C) elastic.
D) perfectly elastic.
E) unitary elastic.

Accepted Answer

A more than proportional increase in attendance means that the percent change in quantity demanded was greater than the percent change in price. This indicates an elastic demand. Therefore, the answer is C.

Question 15

The local bakery calculates the price elasticity of demand for its cinnamon rolls to be -1.25. This tells them that demand is and price is to the buyer.
A) inelastic; less important than the quantity
B) elastic; more important than the quantity
C) unitary elastic; on the same level as quantity
D) perfectly inelastic; everything
E) perfectly elastic; meaningless

Accepted Answer

A price elasticity of demand of -1.25 indicates that demand is elastic, meaning that changes in price will have a significant impact on the quantity of cinnamon rolls demanded. This also means that price is more important to the buyer than the quantity of cinnamon rolls.

Question 16

Sellers of bottled water find that whether the price falls or rises, the quantity bought by consumers remains unchanged every week. The price elasticity of demand for bottled water is:
A) inelastic.
B) elastic.
C) perfectly inelastic.
D) perfectly elastic.
E) unitary elastic.

Accepted Answer

Perfectly inelastic means that the quantity demanded does not change with a change in price. In this case, the quantity remains unchanged regardless of whether the price of bottled water rises or falls, indicating a perfectly inelastic demand.

Question 17

Jane says that she will always spend $20 a week on lattes. Jane's demand for lattes is price:
A) inelastic.
B) elastic.
C) perfectly inelastic.
D) perfectly elastic.
E) unitary elastic.

Accepted Answer

Jane's demand for lattes is unitary elastic because she spends a constant amount ($20) regardless of the price, indicating that the percentage change in quantity demanded is equal to the percentage change in price.

Question 18

There was a more than proportional decrease in quantity demanded for cupcakes when the local baker raised the price by 20%. The price elasticity of demand for cupcakes is:
A) inelastic.
B) elastic.
C) perfectly inelastic.
D) perfectly elastic.
E) unitary elastic.

Accepted Answer

When the quantity demanded decreases more than the proportional increase in price, demand is said to be elastic. Therefore, the price elasticity of demand for cupcakes is elastic.

Question 19

To keep the percentage change in quantity demanded equally proportional to the percentage change in price when the prices rise by 5%, a consumer would need to quantity demanded by .
A) increase; 5%
B) decrease; 5%
C) increase; 10%
D) decrease; 10%
E) increase; 2%

Accepted Answer

The answer of To keep the percentage change in quantity...

Question 20

Demand is almost always more price elastic in the long run because:
A) people's preferences change.
B) newer versions of a good/service replace older ones.
C) production of the good/service stops.
D) more options become available and people can make different choices.
E) government regulations increase.

Accepted Answer

In the long run, consumers have more time to find substitutes and adjust their consumption habits, making demand more price elastic.

Quiz 4: Elasticity

Refer to the following graphs to answer the questions. Graph A Graph B Graph C Graph D Graph E -Which of these graphs most likely depicts a price elasticity of demand of -0.2?

Refer to the following graphs to answer the questions. Graph A Graph B Graph C Graph D Graph E -Which of these graphs represents relatively price elastic demand for a good?

When would oil producers see the largest percentage decline in the quantity demanded for oil due to an increase in the price of oil today?

Refer to the following graphs to answer the questions. Graph A Graph B Graph C Graph D Graph E -Which of these graphs most likely depicts a price elasticity of demand of -5?

Refer to the following graphs to answer the questions. Graph A Graph B Graph C Graph D Graph E -Which of these graphs represents perfectly price inelastic demand for a good?

When the price elasticity of demand is elastic, a consumer is:

If a business finds that demand for its good is very price elastic, it knows that:

When quantity demanded and price increase by 10%, you know that price and quantity are to the consumer.

"No matter the price, I will always buy five gallons of ice cream a week. I love ice cream!" This statement reflects a price elasticity of demand that is:

Kevin tells the manager at Moo's Ice Cream that he won't buy any ice cream cones costing more than $2, but he will buy a limitless number at any price less than $2. His price elasticity of demand for ice cream cones is:

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:

The Sunny Softball league found that, when it changed its ticket prices from $10 to $5, there was a more than proportional but not infinite increase in attendance. The price elasticity of demand is:

The local bakery calculates the price elasticity of demand for its cinnamon rolls to be -1.25. This tells them that demand is and price is to the buyer.

Sellers of bottled water find that whether the price falls or rises, the quantity bought by consumers remains unchanged every week. The price elasticity of demand for bottled water is:

Jane says that she will always spend $20 a week on lattes. Jane's demand for lattes is price:

There was a more than proportional decrease in quantity demanded for cupcakes when the local baker raised the price by 20%. The price elasticity of demand for cupcakes is:

To keep the percentage change in quantity demanded equally proportional to the percentage change in price when the prices rise by 5%, a consumer would need to quantity demanded by .

Demand is almost always more price elastic in the long run because: