Download CH 4 QUIZ REVIEW (3-7

Question
If the price elasticity of demand is equal to 4, a 1%
increase in price will cause the quantity demanded
to ________ by ________ percent.
a) decrease; 25
b) increase; 4
c) decrease; ¼
d) decrease; 4
e) increase; 1/4
Answer
If the price elasticity of demand is equal to 4, a 1%
increase in price will cause the quantity demanded
to ________ by ________ percent.
a) decrease; 25
b) increase; 4
c) decrease; ¼
d) decrease; 4 (Correct)
e) increase; 1/4
Question
Which of the following statements about the price
elasticity of demand is true?
a) Slope and elasticity measure the same things.
b) Price elasticity of demand will vary depending on
how price and quantity are measured.
c) It is important to know whether the price elasticity
of demand is a positive or negative number.
d) The slope of a demand curve does not tell us the
price elasticity of demand.
e) Price elasticity is the same everywhere along a
demand curve of any shape.
Answer
Which of the following statements about the price
elasticity of demand is true?
a) Slope and elasticity measure the same things.
b) Price elasticity of demand will vary depending on
how price and quantity are measured.
c) It is important to know whether the price elasticity
of demand is a positive or negative number.
d) The slope of a demand curve does not tell us the
price elasticity of demand. (Correct)
e) Price elasticity is the same everywhere along a
demand curve of any shape.
Question
If a product has an inelastic demand, this means that
a) consumers are relatively insensitive to a change
in the price of the product.
b) producers are relatively sensitive to a change in
the quantity demanded.
c) consumers are relatively sensitive to a change in
the price of the product.
d) producers are relatively insensitive to a change in
the quantity demanded.
e) consumers are relatively insensitive to a change
in the quantity demanded.
Answer
If a product has an inelastic demand, this means that
a) consumers are relatively insensitive to a change
in the price of the product. (Correct)
b) producers are relatively sensitive to a change in
the quantity demanded.
c) consumers are relatively sensitive to a change in
the price of the product.
d) producers are relatively insensitive to a change in
the quantity demanded.
e) consumers are relatively insensitive to a change
in the quantity demanded.
Question
Carla buys one soft drink a day regardless of the price.
Which of the following statements is correct with
respect to Carla?
a) Price elasticity of demand for soft drinks
is infinite.
b) Price elasticity of demand for soft drinks
is zero.
c) Price elasticity of demand for soft drinks is 1.
d) Cross-price elasticity of demand for soft drinks
is 1.
e) Price elasticity of demand cannot be calculated
with the information given.
Answer
Carla buys one soft drink a day regardless of the price.
Which of the following statements is correct with
respect to Carla?
a) Price elasticity of demand for soft drinks
is infinite.
b) Price elasticity of demand for soft drinks
is zero. (Correct)
c) Price elasticity of demand for soft drinks is 1.
d) Cross-price elasticity of demand for soft drinks
is 1.
e) Price elasticity of demand cannot be calculated
with the information given.
Question
When the demand curve is a vertical line,
demand is
a) relatively elastic.
b) perfectly inelastic.
c) unit-elastic.
d) infinitely elastic.
e) cross-elastic.
Answer
When the demand curve is a vertical line,
demand is
a) relatively elastic.
b) perfectly inelastic. (Correct)
c) unit-elastic.
d) infinitely elastic.
e) cross-elastic.
Question
Suppose that the price of product G increases
from $10 to $20 and, in response, quantity
demanded declines from 100 to 80. Using the
midpoint formula, what is the price elasticity of
demand?
a) - 0.5
b) - 3
c) - 0.67
d) - 0.33
e) - 2
Answer
Suppose that the price of product G increases
from $10 to $20 and, in response, quantity
demanded declines from 100 to 80. Using the
midpoint formula, what is the price elasticity of
demand?
a) - 0.5
b) - 3
c) - 0.67
d) - 0.33 (Correct)
e) - 2
Question
If a consultant to a Major League Baseball team
owner suggests that ticket prices be raised in order
to increase revenue, the consultant must believe
that the absolute value of the price elasticity of
demand for baseball tickets is
a) equal to infinity.
b) less than 1.
c) greater than 1.
d) equal to 1.
e) There is not enough information provided to
answer this question.
Answer
If a consultant to a Major League Baseball team
owner suggests that ticket prices be raised in order
to increase revenue, the consultant must believe
that the absolute value of the price elasticity of
demand for baseball tickets is
a) equal to infinity.
b) less than 1. (Correct)
c) greater than 1.
d) equal to 1.
e) There is not enough information provided to
answer this question.
Question
The maximum number of seats at the University of
Phoenix Stadium, the site for Super Bowl XLII, is
73,000. At this quantity, the price elasticity of
supply for tickets is
a) very elastic.
b) perfectly inelastic.
c) perfectly elastic.
d) infinite.
e) 73,000.
Answer
The maximum number of seats at the University of
Phoenix Stadium, the site for Super Bowl XLII, is
73,000. At this quantity, the price elasticity of
supply for tickets is
a) very elastic.
b) perfectly inelastic. (Correct)
c) perfectly elastic.
d) infinite.
e) 73,000.
Question
Last year, Keith purchased 20 pounds of beef
when his income was $30,000. This year his
income is $40,000 and he purchased 40 pounds of
beef. Which of the following statements is true?
a) Keith’s demand for beef is price inelastic.
b) Beef and income are substitutes.
c) Keith’s demand for beef is price elastic.
d) Beef is a normal good.
e) None of the above.
Answer
Last year, Keith purchased 20 pounds of beef
when his income was $30,000. This year his
income is $40,000 and he purchased 40 pounds of
beef. Which of the following statements is true?
a) Keith’s demand for beef is price inelastic.
b) Beef and income are substitutes.
c) Keith’s demand for beef is price elastic.
d) Beef is a normal good. (Correct)
e) None of the above.
Question
For a given shift in demand, the less elastic is
supply,
a) the greater is the shift in demand.
b) the greater is the change in equilibrium
quantity.
c) the smaller is the shift in demand.
d) the greater is the change in price.
e) the smaller is the change in price.
Answer
For a given shift in demand, the less elastic is
supply,
a) the greater is the shift in demand.
b) the greater is the change in equilibrium
quantity.
c) the smaller is the shift in demand.
d) the greater is the change in price. (Correct)
e) the smaller is the change in price.
Question
Suppose that Bob increased his expenditures for comic
books as his income increased. This implies that Bob
considers comic books as
a) inferior goods and his income elasticity of demand for
comic books is negative.
b) inferior goods and his income elasticity of demand for
comic books is positive.
c) normal goods and his income elasticity of demand for
comic books is negative.
d) normal goods and his income elasticity of demand for
comic books is positive.
e) Inferior goods and his income elasticity of demand for
comic books is zero.
Answer
Suppose that Bob increased his expenditures for comic
books as his income increased. This implies that Bob
considers comic books as
a) inferior goods and his income elasticity of demand for
comic books is negative.
b) inferior goods and his income elasticity of demand for
comic books is positive.
c) normal goods and his income elasticity of demand for
comic books is negative.
d) normal goods and his income elasticity of demand for
comic books is positive. (Correct)
e) Inferior goods and his income elasticity of demand for
comic books is zero.