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Chapter 04 - Elasticity
1. The price elasticity of demand is a measure of the:
2. If the price-elasticity coefficient for a good is .75, the demand for that good is described as:
Chapter 04 - Elasticity
3. When the price of a product is increased 10 percent, the quantity demanded decreases 15
percent. In this range of prices, demand for this product is:
4. If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in
price will increase quantity demanded by:
5. A straight-line downward-sloping demand curve has a price elasticity of demand which:
Chapter 04 - Elasticity
6. Refer to the graphs above. Which demand curve is relatively most elastic between P1 and
P2?
7. Refer to the graphs above. Which demand curve is perfectly inelastic?
Chapter 04 - Elasticity
8. Which is inconsistent with an elastic demand curve?
9. Block's sells 500 bottles of perfume a month when the price is $7. A huge increase in
resource costs forces Block's to raise price to $9 and the firm only manages to sell 460 bottles
of perfume. The price elasticity of demand is:
Chapter 04 - Elasticity
10. Suppose you are given the following data on demand for a product. The price elasticity of
demand (based on the midpoint formula) when price decreases from $9 to $7 is:
11. When the price of candy bars decreased from $.55 to $.45 the quantity demanded changed
from 19,000 per day to 21,000 per day. In this price range, the price-elasticity coefficient
(based on the midpoint formula) for candy bars is:
Chapter 04 - Elasticity
12. Consider the parallel demand curves in the figure above. Which curve is relatively more
elastic at P1?
Chapter 04 - Elasticity
13. Refer to the graphs above. A price increase from $20 to $40 causes quantity demanded to
decrease from 100 units to 50 units. Which graph best illustrates the demand for this good?
14. Refer to the graphs above. Which one shows a perfectly elastic demand?
15. Refer to the graphs above. Which one shows demand with a price-elasticity coefficient
equal to zero?
Chapter 04 - Elasticity
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16. Refer to the graphs above. Which one shows a situation where buyers are all willing to
pay one uniform price for the product?
17. If a 5 percent cut in the price of a product causes the quantity demanded to rise by 10
percent, the demand is:
Answer the question based on the following data.
Chapter 04 - Elasticity
18. Refer to the above data. Over which price range is the demand inelastic?
19. Refer to the above data. Over which price range is the demand elastic?
20. Refer to the above data. Over which price range is the demand unit-elastic?
Chapter 04 - Elasticity
21. Refer to the above data. What is the price elasticity of demand over the range of $8 to
$10?
22. If an increase in the supply of a product results in a decrease in the price, but no change in
the quantity traded, then:
23. Along a linear downward-sloping demand curve, the price elasticity of demand will be:
Chapter 04 - Elasticity
24. Refer to the figure above. Over the $5-$6 range, the elasticity of demand using the mid-
point formula is:
Chapter 04 - Elasticity
25. The price of season tickets to a performing arts theater decreases by 3 percent. As a result,
the quantity demanded increases by 6 percent. The price elasticity of demand for season
tickets is:
26. The price elasticity of demand for a popular sporting event is 2. If the price of a ticket to
this event increases by 10 percent, the quantity of tickets demanded will:
27. Total revenue falls as the price of a good is raised, if the demand for the good is:
Chapter 04 - Elasticity
28. A 4 percent reduction in the price of a product has zero effect on the dollar amount of
consumer expenditure on the product. The price elasticity of demand is:
29. Refer to the total revenue graph above. An increase in the quantity of product X
demanded from 14,000 to 16,000 units implies that the price of product X was:
Chapter 04 - Elasticity
30. Refer to the total revenue graph above. Demand is price-elastic between points:
31. Refer to the total revenue graph above. When the seller is earning maximum revenues
from Product X, the demand is:
Chapter 04 - Elasticity
32. Consider the demand curve above. If area 0ABC is smaller than area 0DEF, we may
conclude that demand in this range is:
33. Demand is said to be inelastic when:
34. In which instances will total revenues decline?
Chapter 04 - Elasticity
Answer the question based on the following table.
35. Refer to the table above. Total revenues will decrease if price rises from:
36. Refer to the above table. The largest decline in total revenue will occur when price falls
from:
Chapter 04 - Elasticity
37. Refer to the above table. The price-elasticity coefficient in the price-range from $4 to $3
is:
38. The price-elasticity coefficients are 2.6, .5, 1.4, and .18 for four different demand
schedules D1, D2, D3, and D4, respectively. A 2 percent increase in price will result in an
increase in total revenues in which of the following cases?
39. If 100 shirts are sold when unit price is $10, while 75 shirts are sold when the unit price is
$15, one can conclude that in this price range:
Chapter 04 - Elasticity
40. Assume that pizza and hamburgers are the only food items available to consumers. If the
price of pizza increases, then which of the following will definitely happen?
41. When the price of movie tickets in a certain town was reduced, the movie-theaters'
revenues did not change. This suggests that the demand for movie tickets in that town has a
price-elasticity coefficient of
42. Chuck Grim has a price elasticity of demand for beer of 1.2. Suppose that the price of beer
is increased by 10 percent. What will happen to the total amount Chuck spends on beer?
Chapter 04 - Elasticity
43. If the price elasticity of demand for orange juice is 0.8, then a reduction in the price of
orange juice will cause buyers to buy:
44. Refer to the table above. If the price starts falling from $5, at what price range does
demand become inelastic?
Chapter 04 - Elasticity
45. Refer to the table above. What is the price that yields the maximum total revenue?
46. Refer to the above graph. If the price is P3, then the total revenue is represented by areas:
