Chapter 04 Test Bank KEY
1. Price elasticity is a measure of how
2. If supply and demand analysis is a measure of how, then elasticity is a measure of:
3. The concept of price elasticity is applied to changes in:
4. Different measurements of elasticity include:
5. Elasticities are used to measure responses to a change in:
6. The most commonly used measures of elasticity are:
7. The price elasticity of demand for eggs is 0.27. Thus, 0.27 is the:
8. If a one percent change in the price of oil causes a 0.02 percent change in the quantity demanded of
oil, then 0.02 is the
9. If a small percentage change in price causes a larger percentage change in the quantity demanded,
the good has:
10. If a good has an elastic demand, then:
11. If consumers’ buying decisions are not very sensitive to changes in price, then their demand is:
12. If a large percentage change in price leads to a smaller percentage change in quantity demanded, the
result is a:
13. Mathematically, price elasticity of demand is the percentage change in the:
14. The calculated price elasticity of demand:
15. Economists use the percentage change in quantity rather than the absolute change in quantity
because:
16. The mid-point method of calculating elasticity is typically used because:
17. The mid-point method of calculating price elasticity of demand:
18. Suppose a decrease in price increases quantity demanded from 8 to 12. Using the mid-point formula,
the percentage change in quantity demanded is:
19. Suppose an increase in price decreases quantity demanded from 210 to 190. Using the mid-point
formula, the percentage change in quantity demanded is:
20. Suppose price increases from $7.00 to $13.00. Using the mid-point formula, the percentage change in
price is:
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21. Suppose price decreases from $27.00 to $13.00. Using the mid-point formula, the percentage change
in price is:
22. Suppose when the price of calculators is $18, the quantity demanded is 90, and when the price is
$22, the quantity demanded drops to 70. Using the mid-point method, the price elasticity of demand is:
23. Suppose when the price of movie tickets is $7.50, the quantity demanded is 550, and when the price
is $8.50, the quantity demanded is 450. Using the mid-point method, the price elasticity of demand is:
24. Suppose when the price of a can of tuna is $1.30, the quantity demanded is 9, and when the price is
$1.50, the quantity demanded is 7. Using the mid-point method, the price elasticity of demand is:
25. Suppose when the price of mascara is $12, the quantity demanded is 450, and when the price is $8,
the quantity demanded is 550. Using the mid-point method, the price elasticity of demand is:
26. If the price of a good increases by 10 percent, its quantity demanded drops by 50 percent. The price
elasticity of demand is:
27. If the price of a cup of coffee increases by 50 percent, the quantity demanded decreases by 50
percent. The price elasticity of demand is:
28. If the price of hairbrushes decreases by 20 percent, the quantity demanded increases by 2 percent.
The price elasticity of demand is:
29. If the price of a DVD decreases by 50 percent, the quantity demanded increases by 75 percent. The
price elasticity of demand is:
30. Suppose when the price of a cookie is $2.50, the quantity demanded is 50, and when the price is $1,
the quantity demanded is 200. Using the midpoint method, the price elasticity of demand is:
31. Suppose price increases from $9.00 to $11.00. Using the mid-point formula, the percentage change in
price is:
32. Suppose quantity supplied increases from 16 to 24. Using the mid-point formula, the percentage
change in quantity supplied is:
33. The determinants of price elasticity of demand include:
34. Producers want to calculate the price elasticity of demand because they want to:
Topic: Elasticity
35. When a good has many close substitutes available, it is likely to be:
36. The demand for a specific brand of corn flakes cereal is likely to be:
37. The demand for Farm fresh brand apple juice is likely to be:
38. The demand for novels is _____________ than is the demand for science textbooks because
__________________.
39. The demand for spring break vacations is _________________ than is the demand for textbooks
because ________________.
40. The demand for a cup of coffee is ______________ than is the demand for a dinner at a fancy
restaurant because _________________.
41. The demand for a pack of gum is ______________ than is the demand for a steak because
_______________.
42. If consumers spend more money on coffee than on sugar, then the demand for a pound of coffee is
probably _________________ than is the demand for a pound sugar of because ________________.
43. The demand for a subway ride is probably ___________________ than is the demand for a car
because ___________________.
44. The demand for a movie ticket is probably _________________ than is the demand for a Broadway
show ticket because ______________.
45. The more time people have to adjust to a price change:
46. The response in quantity demanded to a price increase in subway rides:
47. The change in the quantity demanded of gas because of increasing gas prices over the last decade:
48. The price elasticity of demand for eggs is .27 and the price elasticity of demand for soft drinks is .70.
Therefore, the demand for eggs
49. The demand for classical music is _______________ than is the demand for Beethoven’s music
because _______________.
50. The demand for ice cream is _________________ than is the demand for frozen treats because
________________.
51. The demand for steak is _______________________ than is the demand for food because
_____________________.
52. The demand for shoes is ___________________ than is the demand for sneakers because
__________________.
53. The demand for markers is _______________________ than is the demand for Sharpies because
____________________.
54. The demand for Ben & Jerry’s ice cream is _________________ than is the demand for all ice cream
because _______________.
55. The demand for dolls is __________________ than is the demand for Barbie dolls because
___________________.
56. The price elasticity of demand for business air travel is .80 and the price elasticity of demand for
leisure air travel is 1.60. Therefore, the demand for leisure air travel
57. The price elasticity of demand for leisure air travel is 1.60. Therefore, a
58. A perfectly elastic demand is one in which the:
59. A perfectly elastic demand:
60. A horizontal demand curve indicates:
61. A perfectly inelastic demand is one in which the:
62. A perfectly inelastic demand means:
63. A perfectly inelastic demand:
64. The price elasticity ofdemand for insulin is:
65. Assuming price elasticity of demand is reported as an absolute value, an elastic demand has an
elasticity:
66. Assuming price elasticity of demand is reported as an absolute value, an inelastic demand has a
measured elasticity:
67. Assuming price elasticity of demand is reported as an absolute value, a price elasticity of demand of
1.2 indicates an:
68. Assuming elasticity of demand is reported as an absolute value, a price elasticity of demand of 0.4
indicates an:
69. Assuming price elasticity of demand is reported as an absolute value, a price elasticity of demand
greater than one indicates demand:
70. Assuming price elasticity of demand is reported as an absolute value, a price elasticity of demand
less than one indicates demand for the good is:
71. In general, the more elastic a demand curve is the:
72. Assuming price elasticity of demand is reported as an absolute value, a price elasticity of one
indicates:
73. Assuming price elasticity of demand is reported as an absolute value, a good with unit elastic demand
has an elasticity:
74. If a good has unitary price elasticity of demand, then the absolute value of the percentage change in
75. A good with a unit elastic demand has a:
76. Knowing the price elasticity of demand is important in business because it allows a manager to
determine whether:
77. Total revenue is the amount: