Weekly Assignment # 3
1. In general terms, what does elasticity measure?
a. How price is determined between buyers and sellers in a market
b. How much government intervention is prevalent in a market
c. How competitive a market is
d. How much buyers and sellers respond to changes in market conditions
2. When is demand said to be elastic?
a. If the price of the good responds substantially to changes in demand
b. If demand shifts substantially when the price of the good changes
c. If buyers do not respond much to changes in the price of the good
d. If the quantity demanded responds substantially to changes in the price
of the good
3. If a good is a necessity, what would demand for the good tend to be?
a. Elastic
b. Horizontal
c. Inelastic
d. Unit elastic
4. If a good is a luxury, what would demand for the good tend to be?
a. Inelastic
b. Elastic
c. Unit elastic
d. Perfectly elastic
5. Which of the following categories of goods would have the most elastic demand?
a. Clothing
b. Jeans
c. Blue jeans
d. Levi’s jeans
6. When would demand for a good tend to be more inelastic?
a. When there are fewer available substitutes
b. When the time period considered is longer
c. When the good is considered more of a luxury good
d. When the market is more narrowly defined
7. When the price of bubble gum is $0.50, the quantity demanded is 400 packs per
day. When the price falls to $0.40, the quantity demanded increases to 600. Given
this information and using the midpoint method, what do you know about the
demand for bubble gum?
a. It is inelastic.
b. It is elastic.
c. It is unit elastic.
d. It is perfectly inelastic.
8. What does the price elasticity of demand for a good measure?
a. How willing consumers are to move away from the good as price rises
b. How willing firms are to produce more of a good as price rises
c. How willing consumers are to buy more of a good as price rises
d. How willing firms are to produce more of a good as price falls
9. When demand is inelastic, what will a decrease in price cause?
a. An increase in total revenue
b. A decrease in total revenue
c. No change in total revenue
d. An uncertain change in total revenue
10. What would be the absolute value of the elasticity if demand is elastic?
a. Less than 1
b. Equal to 1
c. Equal to 0
d. Greater than 1
11. When is demand said to be inelastic?
a. When the quantity demanded changes proportionately more than price
