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The document contains a key for practice problems on elasticity. It provides 10 multiple choice questions with answers about concepts of price elasticity of demand including:
1) Price elasticity of demand measures the responsiveness of quantity demanded to a change in price.
2) When demand is inelastic, a 1% increase in price leads to less than a 1% decrease in quantity demanded.
3) Total revenues will decline when price rises and demand is elastic (Ed is greater than 1).
The document contains a key for practice problems on elasticity. It provides 10 multiple choice questions with answers about concepts of price elasticity of demand including:
1) Price elasticity of demand measures the responsiveness of quantity demanded to a change in price.
2) When demand is inelastic, a 1% increase in price leads to less than a 1% decrease in quantity demanded.
3) Total revenues will decline when price rises and demand is elastic (Ed is greater than 1).
The document contains a key for practice problems on elasticity. It provides 10 multiple choice questions with answers about concepts of price elasticity of demand including:
1) Price elasticity of demand measures the responsiveness of quantity demanded to a change in price.
2) When demand is inelastic, a 1% increase in price leads to less than a 1% decrease in quantity demanded.
3) Total revenues will decline when price rises and demand is elastic (Ed is greater than 1).
1. The price elasticity of demand is a measure of the:
A) steepness or slope of a demand curve. B) absolute changes in quantity demanded and price. C) responsiveness of quantity demanded to a change in price. D) sensitivity of the quantity demanded for one good to a change in the price of another good. Answer: C . !f the price elasticity of demand for a good is ."#$ the demand for the good can be described as: A) normal. B) elastic. C) inferior. D) inelastic. Answer: D %. &hen the price of a product is increased 1' percent$ the quantity demanded decreases 1# percent. !n this range of prices$ demand for this product is: A) elastic. B) inelastic. C) cross(elastic. D) unitary elastic. Answer: A ). A straight(line do*n*ard(sloping demand curve has a price elasticity of demand *hich: A) decreases as price decreases. C) is +ero at all prices. B) increases as price decreases. D) is unitary at all prices. Answer: A #. Bloc,-s sells #'' bottles of perfume a month *hen the price is .". A huge increase in resource costs causes price to rise to ./ and Bloc,-s only manages to sell )0' bottles of perfume. The price elasticity of demand is: A) .%% and elastic. B) %.' and elastic. C) .%% and inelastic. D) %.' and inelastic. Answer: C 0. &hen the price of candy bars increased from ..)# to ..## the quantity demanded changed from 1$''' per day to 1/$''' per day. !n this range the price elasticity of demand for candy bars is: A) 1. B) . C) '.. D) '.#. Answer: D ". !f price declines from .)#' to .%#' and$ as a result$ quantity demanded increases from 1'' to 1#''$ price elasticity of demand is: A) 1."1. B) .1/. C) 1.1. D) %.). Answer: B 1. !f a # percent fall in the price of a product causes the quantity demanded of the product to increase by 1' percent$ the demand is: A) inelastic. B) elastic. C) unit elastic. D) perfectly elastic. Answer: B /. Demand can be said to be inelastic *hen: A) an increase in price results in a reduction in total revenue. B) a reduction in price results in an increase in total revenue. C) a reduction in price results in a decrease in total revenue. D) the elasticity coefficient e2ceeds one. Answer: C 1'. !n *hich instances *ill total revenues decline3 A) 4rice rises and E d equals .)1. C) 4rice falls and demand is elastic. B) 4rice rises and demand is of unit elasticity. D) 4rice rises and E d equals .)". Answer: D