The price elasticity of demand of a straight-line demand curve is:

elastic in high-prices and inelastic on low-prices

For a linear demand curve:

demand is elastic at high prices

The larger the price elasticity of supply for a product, the:

larger the quantity change for an increase in price

Suppose the income elasticity of demand for toys is +2.00. This means that:

a 10% increase in income will increase the quantity by 20%.

The elasticity of demand for a product is likely to be greater

If there is a lot of time prior to purchasing

The concept of price elasticity of demand measures:

the sensitivity of consumers to price changes.

If the demand for product X is inelastic, a 4 percent increase in the price of X will:

Decrease Q by less than 4 percent

Which of the following statements is correct?

Demand is more elastic when substitute goods are available

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Elasticity Review

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Review questions for elasticity of demand, supply, income, and cross price. #elasticity

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Questions 19

Answers

1
The price elasticity of demand of a straight-line demand curve is:
elastic,but does not change at various points on the curve
elastic in high-prices and inelastic on low-prices
1 at all points on the curve
inelastic,but does not change at various points on the curve
2
If the price elasticity is less than 1 but greater than zero, demand is:
perfectly inelastic
relatively elastic
perfectly elastic
relatively inelastic
3
For a linear demand curve:
demand is elastic at high prices
demand is elastic at low prices
elasticity is constant along the curve
elasticity is unit at every point on the curve
4
Price falls from $100 to $90 and the Qd increases from 50 to 60 units. Demand for X is:
is of unit elasticity
has declined
is inelastic
is elastic
5
The larger the price elasticity of supply for a product, the:
faster utility will diminish
smaller the quantity change for an increase in price
larger the quantity change for an increase in price
less competitive will be the industry supplying that product
6
The demands for such products as salt, bread, and electricity tend to be:
relatively elastic
perfectly elastic
unit elastic
relatively inelastic
7
A positive cross price elasticity of demand between products X and Y, means:
They are complements
They are inferior goods
They are substitutes
They are normal goods
8
Suppose the income elasticity of demand for toys is +2.00. This means that:
toys are inferior
a 10% increase in income will increase quantity by 2%
A 10% increase in income will decrease quantity by 2%
a 10% increase in income will increase the quantity by 20%.
9
The elasticity of demand for a product is likely to be greater
If there is a lot of time prior to purchasing
The product's price is a small percentage of income
If the product is a necessity
There are no substitutes for this good
10
If a price reduction reduces a firm's total revenue
Demand is inelastic
The firm's profits will increase
Demand is elastic
The product is inferior
11
A demand curve which is parallel to the horizontal axis is
relatively elastic
relatively inelastic
perfectly inelastic
perfectly elastic
12
The concept of price elasticity of demand measures:
the number of buyers in a market.
the sensitivity of consumers to price changes.
the extent to which the demand curve shifts.
the slope of the demand curve.
13
A perfectly inelastic demand schedule
Cannot be shown on a two dimensional graph
Is upward sloping
Is a horizontal line
Is a vertical line
14
If the demand for product X is inelastic, a 4 percent increase in the price of X will:
Decrease Q by less than 4 percent
Increase Q by more than 4 percent
decrease Q by more than 4 percent
increase Q by less than 4 percent
15
Which of the following statements is correct?
Demand is more elastic in the short run than in the long run
Supply is more elastic when there are few producers
Demand is more elastic when substitute goods are available
Supply is more elastic in the short run than in the long run
16
The total-revenue test for elasticity:
only works in the short run
does not apply to demand
does not apply to supply
works for supply and demand
17
Moving upward on a downward-sloping, straight-line demand curve, we find that price elasticity:
increases continuously
decreases continuously
may either increase or decrease
is constant
18
If a firm can sell $13,000 of a good when P is $5 and $11,000 of it when its P is $6,then
Elasticity is inelastic
Elasticity must be less than 1
Demand is elastic
Demand has increased
19
In the P3P4 price range demand is:
relatively elastic
perfectly elastic
relatively inelastic
unit elastic

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