67. When the price of a good is $5, the quantity demanded is 120 units per month; when the price is $7, the quantity
demanded is 100 units per month. Using the midpoint method, the price elasticity of demand is about
a.
0.55.
b.
1.83.
c.
2.
d.
10.
68. When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each,
it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is
a.
1.14.
b.
1.
c.
0.25.
d.
0.13.
69. When the price of an eBook is $15.00, the quantity demanded is 400 eBooks per day. When the price falls to $10.00,
the quantity demanded increases to 700. Given this information and using the midpoint method, we know that the demand
for eBooks is
a.
inelastic.
b.
elastic.
c.
unit elastic.
d.
perfectly inelastic.
70. Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips
demanded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla
chips in the given price range is
a.
0.33.
b.
0.45.
c.
2.20.
d.
3.00.
71. Suppose that 50 ice cream cones are demanded at a particular price. If the price of ice cream cones rises from that
price by 4 percent, the number of ice cream cones demanded falls to 46. Using the midpoint approach to calculate the
price elasticity of demand, it follows that the
a.
b.
c.
d.
72. When the price of chai tea lattés is $5, Maxine buys 20 per month. When the price is $4, she buys 30 per month.
Maxine’s demand for chai tea lattés is
a.
elastic, and her demand curve would be relatively flat.
b.
elastic, and her demand curve would be relatively steep.
c.
inelastic, and her demand curve would be relatively flat.
d.
inelastic, and her demand curve would be relatively steep.
Table 5-1
Good
Price Elasticity of Demand
A
1.9
B
0.8
73. Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?
a.
A is a luxury and B is a necessity.
b.
A is a good after an increase in income and B is that same good after a decrease in income.
c.
A has fewer substitutes than B.
d.
A is a good immediately after a price increase and B is that same good 3 years after the price increase.
74. Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?
a.
A is laundry detergent and B is Tide.
b.
A is Diet Pepsi and B is soda.
c.
A is food and B is a yacht.
d.
A is toilet paper and B is candles.
75. Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?
a.
A is pens and B is pencils.
b.
A is a Snickers bar and B is a Milky Way bar.
c.
A is an airline ticket from Chicago to New York demanded by a vacationer and B is an airline ticket from
Chicago to New York demanded by a business traveler.
d.
A is a bottle of water demanded by a tourist in a desert and B is a bottle of water demanded by a tourist in a
rain forest.
76. Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X
demanded. Price elasticity of demand for X is
a.
0.
b.
1.
c.
6.
d.
36.
77. If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a
a.
0.2 percent decrease in the quantity demanded.
b.
5 percent decrease in the quantity demanded.
c.
20 percent decrease in the quantity demanded.
d.
40 percent decrease in the quantity demanded.
78. If the price elasticity of demand for a good is 0.5, then a 5 percent increase in price results in a
a.
0.1 percent decrease in the quantity demanded.
b.
1 percent decrease in the quantity demanded.
c.
2.5 percent decrease in the quantity demanded.
d.
10 percent decrease in the quantity demanded.
79. If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a
a.
0.5 percent decrease in the quantity demanded.
b.
2 percent decrease in the quantity demanded.
c.
5 percent decrease in the quantity demanded.
d.
50 percent decrease in the quantity demanded.
80. If the price elasticity of demand for a good is 0.3, then a 20 percent decrease in price results in a
a.
0.015 percent increase in the quantity demanded.
b.
0.6 percent increase in the quantity demanded.
c.
6 percent increase in the quantity demanded.
d.
66 percent increase in the quantity demanded.
81. If the price elasticity of demand for a good is 1.2, then a 3 percent decrease in price results in a
a.
0.4 percent increase in the quantity demanded.
b.
2.5 percent increase in the quantity demanded.
c.
3.6 percent increase in the quantity demanded.
d.
6 percent increase in the quantity demanded.
82. If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a
a.
0.6 percent increase in the quantity demanded.
b.
1.5 percent increase in the quantity demanded.
c.
2 percent increase in the quantity demanded.
d.
6 percent increase in the quantity demanded.
83. If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a
a.
0.1 percent increase in the quantity demanded.
b.
1 percent increase in the quantity demanded.
c.
3 percent increase in the quantity demanded.
d.
4 percent increase in the quantity demanded.
84. If the price elasticity of demand for a good is 4, then a 12 percent decrease in price results in a
a.
0.33 percent increase in the quantity demanded.
b.
3 percent increase in the quantity demanded.
c.
30 percent increase in the quantity demanded.
d.
48 percent increase in the quantity demanded.
85. If the price elasticity of demand for a good is 0.4, then which of the following events is consistent with a 2 percent
decrease in the quantity of the good demanded?
a.
a 0.8 percent increase in the price of the good
b.
a 2.4 percent increase in the price of the good
c.
a 5 percent increase in the price of the good
d.
a 8 percent increase in the price of the good
86. For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the
following statements is most likely applicable to this good?
a.
There are no close substitutes for this good.
b.
The good is a luxury.
c.
The market for the good is broadly defined.
d.
The relevant time horizon is short.
87. For a particular good, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the
following statements is most likely applicable to this good?
a.
There are many substitutes for this good.
b.
The good is a necessity.
c.
The market for the good is broadly defined.
d.
The relevant time horizon is short.
88. For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the
following statements is most likely applicable to this good?
a.
There are many close substitutes for this good.
b.
The good is a luxury.
c.
The market for the good is broadly defined.
d.
The relevant time horizon is long.
89. For a particular good, an 8 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the
following statements is most likely applicable to this good?
a.
There are no close substitutes for this good.
b.
The good is a necessity.
c.
The market for the good is broadly defined.
d.
The relevant time horizon is long.
90. For a particular good, a 5 percent increase in price causes a 2 percent decrease in quantity demanded. Which of the
following statements is most likely applicable to this good?
a.
There are many close substitutes for this good.
b.
The good is a luxury.
c.
The market for the good is broadly defined.
d.
The relevant time horizon is long.
91. For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the
following statements is most likely applicable to this good?
a.
There are many substitutes for this good.
b.
The good is a necessity.
c.
The market for the good is narrowly defined.
d.
The relevant time horizon is long.
92. For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the
following statements is most likely applicable to this good?
a.
The relevant time horizon is short.
b.
The good is a necessity.
c.
The market for the good is broadly defined.
d.
There are many close substitutes for this good.
93. For a particular good, a 10 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the
following statements is most likely applicable to this good?
a.
The relevant time horizon is short.
b.
The good is a luxury.
c.
The market for the good is narrowly defined.
d.
There are many close substitutes for this good.
94. If a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is
a.
0.75.
b.
1.25.
c.
1.33.
d.
1.60.
95. If a 20% increase in price for a good results in a 15% decrease in quantity demanded, the price elasticity of demand is
a.
0.75.
b.
1.25.
c.
1.33.
d.
1.60.
96. If a 10% decrease in price for a good results in a 20% increase in quantity demanded, the price elasticity of demand is
a.
0.50.
b.
1.
c.
1.5.
d.
2.
97. If a 6% decrease in price for a good results in a 2% increase in quantity demanded, the price elasticity of demand is
a.
0.02.
b.
0.33.
c.
3.
d.
4.
98. Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this
good is
a.
inelastic and equal to 6.
b.
elastic and equal to 6.
c.
inelastic and equal to 0.17.
d.
elastic and equal to 0.17.
99. Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for
this good is
a.
inelastic and equal to 0.67.
b.
elastic and equal to 0.67.
c.
inelastic and equal to 1.50.
d.
elastic and equal to 1.50.
100. If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in
a.
a 20 percent increase in the quantity demanded.
b.
an 18 percent increase in the quantity demanded.
c.
a 2 percent increase in the quantity demanded.
d.
a 1.8 percent increase in the quantity demanded.
101. If the price elasticity of demand for a good is 2, then a 10 percent decrease in the quantity demanded must be the
result of
a.
a 0.2 percent increase in the price.
b.
a 2.5 percent increase in the price.
c.
a 5 percent increase in the price.
d.
a 20 percent increase in the price.
102. If the price elasticity of demand for a good is 0.8, then a 12 percent increase in the quantity demanded must be the
result of
a.
a 0.06 percent decrease in the price.
b.
a 1.5 percent decrease in the price.
c.
a 9.6 percent decrease in the price.
d.
a 15 percent decrease in the price.
103. If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the
result of
a.
a 0.1 percent decrease in the price.
b.
a 1 percent decrease in the price.
c.
a 10 percent decrease in the price.
d.
a 19.6 percent decrease in the price.
104. Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing
smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government
policy should have reduced smoking by
a.
30%.
b.
40%.
c.
80%.
d.
250%.
105. Studies indicate that the price elasticity of demand for beer is about 0.9. A government policy aimed at reducing beer
consumption changed the price of a case of beer from $10 to $20. According to the midpoint method, the government
policy should have reduced beer consumption by
a.
30%.
b.
40%.
c.
60%.
d.
74%.
Table 5-2
Price
Quantity
$250
0
$200
30
$150
70
$100
110
$50
150
$0
190
106. Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the absolute value of the price
elasticity of demand is
a.
5.3.
b.
2.8.
c.
0.8.
d.
0.36.
107. Refer to Table 5-2. Using the midpoint method, if the price falls from $150 to $100, the absolute value of the price
elasticity of demand is
a.
0.4.
b.
0.9.
c.
1.1.
d.
2.
108. Refer to Table 5-2. Using the midpoint method, if the price falls from $100 to $50, the absolute value of the price
elasticity of demand is
a.
0.31.
b.
0.46.
c.
1.25.
d.
2.17
109. Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is
a.
zero.
b.
unit elastic.
c.
inelastic.
d.
elastic.
110. Refer to Table 5-2. Using the midpoint method, if the price falls from $100 to $50, the price elasticity of demand is
a.
zero.
b.
inelastic.
c.
unit elastic.
d.
elastic.
Table 5-3
Consider the following demand schedule.
Price
Quantity Demanded
$0
1,000
$3
800
$6
600
$9
400
$12
200
$15
0
111. Refer to Table 5-3. Using the midpoint method, what is the price elasticity of demand between $0 and $3?
a.
0.11
b.
0.22
c.
0.40
d.
2.00
112. Refer to Table 5-3. Using the midpoint method, in which range is demand most elastic?
a.
$0 to $3
b.
$3 to $6
c.
$9 to 12
d.
$12 to $15
Table 5-4
The following table shows the demand schedule for a particular good.
Price
Quantity
$20
0
$16
3
$12
6
$8
9
$4
12
$0
15
113. Refer to Table 5-4. Using the midpoint method, what is the price elasticity of demand when price rises from $12 to
$16?
a.
0.43
b.
0.67
c.
2.33
d.
4
114. Refer to Table 5-4. Using the midpoint method, when price rises from $8 to $12, the price elasticity of demand is
a.
0.4
b.
1
c.
1.5
d.
2.33
115. Refer to Table 5-4. Using the midpoint method, when price falls from $8 to $4, the price elasticity of demand is
a.
0.43
b.
0.67
c.
1
d.
2.33
Figure 5-1
116. Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to
a.
0.33.
b.
0.67.
c.
1.5
d.
2.67.
117. Refer to Figure 5-1. Between point A and point B, the slope is equal to
a.
-1/4, and the price elasticity of demand is equal to 2/3.
b.
-1/4, and the price elasticity of demand is equal to 3/2.
c.
-3/2, and the price elasticity of demand is equal to 1/4.
d.
-2/3, and the price elasticity of demand is equal to 3/2.
118. Refer to Figure 5-1. Between point A and point B on the graph, demand is
a.
perfectly elastic.
b.
inelastic.
c.
unit elastic.
d.
elastic, but not perfectly elastic.
119. Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change
in price, the
a.
steeper the demand curve will be.
b.
flatter the demand curve will be.
c.
further to the right the demand curve will sit.
d.
closer to the vertical axis the demand curve will sit.
120. Elasticity of demand is closely related to the slope of the demand curve. The less responsive buyers are to a change
in price, the
a.
steeper the demand curve will be.
b.
flatter the demand curve will be.
c.
further to the right the demand curve will sit.
d.
closer to the vertical axis the demand curve will sit.
121. The flatter the demand curve through a given point, the
a.
greater the price elasticity of demand at that point.
b.
smaller the price elasticity of demand at that point.
c.
closer the price elasticity of demand will be to the slope of the curve.
d.
greater the absolute value of the change in total revenue when there is a movement from that point upward and
to the left along the demand curve.
122. The smaller the price elasticity of demand, the
a.
steeper the demand curve will be through a given point.
b.
flatter the demand curve will be through a given point.
c.
more strongly buyers respond to a change in price between any two prices P1 and P2.
d.
smaller the decrease in equilibrium price when the supply curve shifts rightward from S1 to S2.
123. As we move downward and to the right along a linear, downward-sloping demand curve,
a.
both slope and elasticity remain constant.
b.
slope changes but elasticity remains constant.
c.
both slope and elasticity change.
d.
slope remains constant but elasticity changes.
124. The difference between slope and elasticity is that slope
a.
is a ratio of two changes, and elasticity is a ratio of two percentage changes.
b.
is a ratio of two percentage changes, and elasticity is a ratio of two changes.
c.
measures changes in quantity demanded more accurately than elasticity.
d.
None of the above is correct; there is no difference between slope and elasticity.
125. Suppose demand is perfectly elastic, and the supply of the good in question decreases. As a result,
a.
the equilibrium quantity decreases, and the equilibrium price is unchanged.
b.
the equilibrium price increases, and the equilibrium quantity is unchanged.
c.
the equilibrium quantity and the equilibrium price both are unchanged.
d.
buyers’ total expenditure on the good is unchanged.
126. A perfectly elastic demand implies that
a.
buyers will not respond to any change in price.
b.
any rise in price above that represented by the demand curve will result in a quantity demanded of zero.
c.
quantity demanded and price change by the same percent as we move along the demand curve.
d.
price will rise by an infinite amount when there is a change in quantity demanded.
127. The case of perfectly elastic demand is illustrated by a demand curve that is
a.
vertical.
b.
horizontal.
c.
downward-sloping but relatively steep.
d.
downward-sloping but relatively flat.
128. When small changes in price lead to infinite changes in quantity demanded, demand is perfectly
a.
elastic, and the demand curve will be horizontal.
b.
inelastic, and the demand curve will be horizontal.
c.
elastic, and the demand curve will be vertical.
d.
inelastic, and the demand curve will be vertical.
129. For a horizontal demand curve,
a.
the slope is undefined, and the price elasticity of demand is equal to 0.
b.
the slope is equal to 0, and the price elasticity of demand is undefined.
c.
both the slope and price elasticity of demand are undefined.
d.
both the slope and price elasticity of demand are equal to 0.
130. Suppose demand is perfectly inelastic, and the supply of the good in question decreases. As a result,
a.
the equilibrium quantity decreases, and the equilibrium price is unchanged.
b.
the equilibrium price increases, and the equilibrium quantity is unchanged.
c.
the equilibrium quantity and the equilibrium price both are unchanged.
d.
buyers’ total expenditure on the good is unchanged.