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Elasticity Week 4

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Week 5 tutorial quiz based on week 4 lecture
Michaela Juric-Donlan
Quiz by Michaela Juric-Donlan, updated more than 1 year ago
Michaela Juric-Donlan
Created by Michaela Juric-Donlan over 8 years ago
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Question 1

Question
The price elasticity of demand is a measure of
Answer
  • the amount of a product purchased when income increases.
  • how much a change in demand affects the equilibrium price.
  • he equilibrium price of a product
  • buyers' responsiveness to changes in the price of a product
  • whether a product is a substitute or a complement.

Question 2

Question
The price elasticity of demand calculated as the ________ divided by the ________.
Answer
  • change in quantity demanded; change in price
  • change in price; change in the quantity demanded
  • percentage change in the quantity demanded; percentage change in price
  • percentage change in the quantity demanded; change in price
  • percentage change in price; percentage change in the quantity demanded

Question 3

Question
Suppose that a 5% increase in the price of a book resulted in a 2.5% decrease in the quantity demanded of the book. The price elasticity of demand for the book is ________, which can be described as ________.
Answer
  • 2, unit elastic.
  • 0.5, elastic
  • 2.5, elastic
  • 2.5, inelastic
  • 0.5, inelastic

Question 4

Question
If a good has many close substitutes, then its demand is most likely
Answer
  • Unit Elastic
  • Elastic
  • Perfectly inelastic
  • inelastic
  • elastic or inelastic depending on whether the price of the good is increasing or decreasing

Question 5

Question
Which of the following is true? i. The easier it is to find substitutes for a good, the more price elastic the demand for the good is. ii. The demand for a good is more price elastic the smaller the proportion of income spent on it. iii. If demand is price elastic, lowering the price leads to a decrease in total revenue.
Answer
  • Only i
  • Only ii
  • Only iii
  • i and ii
  • i and iii

Question 6

Question
When we use the midpoint method to compute the price elasticity of demand we use
Answer
  • The original price and the average quantity
  • The original quantity and the average price
  • The average price ad the original quantity
  • The average price and the average quantity
  • Either the original or new price, and the average quantity

Question 7

Question
What is measured by the price elasticity of supply?
Answer
  • The price elasticity of supply measures how responsive producers are to changes in income
  • The price elasticity of supply measures how responsive producers are to changes in the price of other goods.
  • The price elasticity of supply measures how responsive producers are to changes in the price of a product.
  • The price elasticity of supply is a measure of the slope of the supply curve.
  • The price elasticity of supply measures how responsive producers are to changes in the cost of producing a product

Question 8

Question
If the price elasticity of supply for a good is 10, then supply is
Answer
  • Elastic
  • Perfectly Elastic
  • Unit Elastic
  • Inelastic
  • Perfectly inelastic

Question 9

Question
The extent to which the demand for a good changes when the price of a substitute or complement changes, other things remaining the same, is measured as the
Answer
  • price elasticity of supply
  • cross elasticity of demand
  • price elasticity of demand
  • income elasticity of demand
  • cross income elasticity of demand

Question 10

Question
The income elasticity of demand is ____________ if the good is ___________ good.
Answer
  • positive; an inferior
  • less than one; an inferior
  • positive; a substitute
  • negative; a normal
  • positive; a normal
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