Elasticity

If the demand for a good is unit elastic,

a 5 percent increase in price results in a 5 percent increase in total revenue.
the demand curve is a straight line with slope of -1.
a 5 percent increase in price results in a 5 percent decrease in total revenue.
a 5 percent increase in price does not change total revenue.

Producers’ total revenue will increase if

income falls and the good is a normal good.
the price rises and demand is inelastic.
the price rises and demand is elastic.
income increases and the good is an inferior good.

Producers’ total revenue will decrease if

the price rises and demand is inelastic.
income increases and the good is a normal good.
the price rises and demand is elastic.
income falls and the good is an inferior good.

Demand is unit elastic when

a shift of the supply curve leads to no change in price.
the slope of the demand curve is -1.
a change in the price of the product leads to no change in the total revenue.
a shift of the supply curve leads to an equal shift of the demand curve.

Demand is inelastic if

a leftward shift of the supply curve raises the total revenue.
the good in question has close substitutes.
the smaller angle between the vertical axis and the demand curve is less than 45 degrees.
large shifts of the supply curve lead to only small changes in price.

A straight-line demand curve with negative slope intersects the horizontal axis at 200 tons per week. The point on the demand curve at which the price elasticity of demand is 1 corresponds to a quantity demanded

that would be negative if a negative quantity demanded were possible.
of 100 tons.
of 0 tons.
of 200 tons.

The demand curve in the figure above illustrates the demand for a product with

zero price elasticity of demand at all prices.
a price elasticity of demand that is different at all prices.
unit price elasticity of demand at all prices.
infinite price elasticity of demand.

The figure above illustrates a linear demand curve. If the price rises from $6 to $8 demand is ________ and if the price falls from $8 to $6 demand is ________.

inelastic; inelastic
elastic; inelastic
elastic; elastic
inelastic; elastic

The figure above illustrates a linear demand curve. In the price range from $8 to $6, demand is ________ and in the price range $4 to $2, demand is ________.

elastic; inelastic
inelastic; inelastic
elastic; elastic
inelastic; elastic

The figure above illustrates a linear demand curve. If the price falls from $6 to $4,

total revenue will decrease.
total revenue will increase.
quantity demanded will increase by more than 100 percent.
total revenue will remain unchanged.

The figure above illustrates a linear demand curve. In the range from $8 to $6,

the demand is unit elastic.
the demand is price inelastic.
the demand is price elastic.
more information is needed to determine if the demand is price elastic, unit elastic, or inelastic.

The figure above illustrates a linear demand curve. If the price falls from $8 to $6,

the quantity demanded will increase by less than 20 percent.
total revenue will remain unchanged.
total revenue will increase.
total revenue will decrease.

The figure above illustrates a linear demand curve. By comparing the price elasticity in the $2 to $4 price range with the elasticity in the $8 to $10 range, you can conclude that the elasticity is

the same in both price ranges.
greater in the $8 to $10 range when the price rises but greater in the $2 to $4 range when the price falls.
greater in the $8 to $10 range.
greater in the $2 to $4 range.

A straight-line demand curve with negative slope intersects the horizontal axis at 100 tons per week. At the midpoint on the demand curve (corresponding to 50 tons per week) the price elasticity of demand is

greater than 1.0.
0.5.
1.0.
0.

On a straight-line downward-sloping demand curve, the maximum elasticity of demand occurs

where it intersects the supply curve.
at its vertical intercept.
at its horizontal intercept.
at its midpoint.

On a linear demand curve that intersects both axes,

the elasticity decreases as the price falls and quantity increases.
the elasticity is less than 1.00 at all prices.
the elasticity equals 1.00 at all prices.
the elasticity exceeds 1.00 at all prices.

The demand curve in the figure above illustrates the demand for a product with

zero price elasticity of demand at all prices.
a price elasticity of demand that is different at all prices.
unit price elasticity of demand at all prices.
infinite price elasticity of demand.

The demand curve in the figure above illustrates a product whose demand has a price elasticity of demand equal to

infinity.
zero at all prices.
a different amount at different prices.
one at all prices.

A good with a horizontal demand curve has a demand

with an income elasticity of demand of 0.
with a price elasticity of demand of infinity.
for which there are no substitute.
with a price elasticity of demand of 0.

Unit elastic demand

means that the ratio of a change in the quantity demanded to a change in the price equals 1.
will be vertical.
means that the ratio of a percentage change in the quantity demanded to a percentage change in the price equals 1.
will be horizontal.

The demand for movies is unit elastic if

any increase in the price leads to a 1 percent decrease in the quantity demanded.
a 5 percent decrease in the price leads to an infinite increase in the quantity demanded.
a 5 percent increase in the price leads to a 5 percent decrease in the quantity demanded.
a 5 percent increase in the price leads to a 5 percent increase in total revenue.

A straight-line demand curve along which the price elasticity of demand equals 0 is one that

forms a 45 degree angle with the vertical axis.
is horizontal.
is vertical.
forms a 60 degree angle with the horizontal axis.

When the price elasticity of demand for a good equals

0, the demand curve is horizontal.
1, the demand curve is vertical.
1, the demand curve is horizontal.
0, the demand curve is vertical.

The demand curve in the figure above illustrates the demand for a product with

unit price elasticity of demand at all prices.
a price elasticity of demand that is different at all prices.
infinite price elasticity of demand.
zero price elasticity of demand at all prices.

A good with a vertical demand curve has a demand with

infinite elasticity.
unit elasticity.
zero elasticity.
varying elasticity.

Demand is inelastic if

a large change in quantity demanded results in a small change in price.
the price elasticity of demand is greater than 1.
the quantity demanded is very responsive to changes in price.
the price elasticity of demand is less than 1.

If the price elasticity is between 0 and 1, demand is

inelastic.
elastic.
perfectly elastic.
unit elastic.

Demand is perfectly inelastic when

the good in question has perfect substitutes.
shifts in the supply curve results in no change in price.
shifts of the supply curve results in no change in quantity demanded.
shifts of the supply curve results in no change in the total revenue from sales.

The price elasticity of demand can range between

negative one and one.
zero and infinity.
zero and one.
negative infinity and infinity.

If demand is price elastic,

a 1 percent decrease in the price leads to an increase in the quantity demanded that exceeds 1 percent.
a 1 percent increase in the price leads to an increase in the quantity demanded that exceeds 1 percent.
the price is very sensitive to any shift of the supply curve.
a 1 percent decrease in the price leads to a decrease in the quantity demanded that is less than 1 percent.

The table above gives the demand schedule for peas. Which of the following statements correctly describes the price elasticity of demand?

The price elasticity of demand is larger at point A than at point B.
The price elasticity of demand is constant because the slope is constant.
The price elasticity of demand increases moving from point A to point B to point C to point D to point E.
The price elasticity of demand is larger at point D than at point A.

The table above gives the demand schedule for peas. As you move from point C to point D, the price elasticity of demand is

3.00.
elastic.
0.75.
unit elastic.

The table above gives the demand schedule for peas. As you move from point A to point B, the price elasticity of demand equals

0.50.
0.11.
9.09.
0.22.

The table above gives the demand schedule for snow peas. The demand curve for snow peas is a straight line and so the elasticity of demand is

lower at higher prices.
higher at higher prices.
1 at all prices.
the same at all prices but not 1.

The table above gives the demand schedule for snow peas. If the price of snow peas falls from $4.00 to $3.00 a bushel, total revenue will

increase because demand is elastic in this range.
increase because demand is inelastic in this range.
decrease because demand is inelastic in this range.
decrease because demand is elastic in this range.

The table above gives the demand schedule for snow peas. The price elasticity of demand between $6.00 and $7.00 per bushel is

1.0.
5.0.
2.0.
2.6.

A shift of the supply curve of oil raises the price of oil from $9.50 a barrel to $10.50 a barrel and reduces the quantity demanded from 41 million to 39 million barrels a day. The price elasticity of demand for oil is

2 million barrels a day per dollar.
0.5.
$1 per 2 million barrels a day.
2.0.

The price elasticity of demand is 5.0 if a 10 percent increase in the price results in a ________ decrease in the quantity demanded.

10 percent
50 percent
2 percent
5 percent

Suppose that the quantity of root beer demanded declines from 103,000 gallons per week to 97,000 gallons per week as a consequence of a 10 percent increase in the price of root beer. The price elasticity of demand is

1.66.
6.00.
0.60.
1.40.

A fall in the price of cabbage from $10.50 to $9.50 per bushel increases the quantity demanded from 18,800 to 21,200 bushels. The price elasticity of demand is

1.20.
0.80.
8.00.
1.25.

A fall in the price of lemons from $10.50 to $9.50 per bushel increases the quantity demanded from 19,200 to 20,800 bushels. The price elasticity of demand is

1.25.
1.20.
8.00.
0.80.

Suppose a rise in the price of peaches from $5.50 to $6.50 per bushel decreases the quantity demanded from 12,500 to 11,500 bushels. The price elasticity of demand is

0.5.
1000.0.
2.0.
1.0.

A 20 percent increase in the quantity of pizza demanded results from a 10 percent decline in its price. The price elasticity of demand for pizza is

2.0
10.0.
0.5.
20.0.

A 10 percent increase in the quantity of spinach demanded results from a 20 percent decline in its price. The price elasticity of demand for spinach is

0.5.
20.0.
2.0.
10.0.

If a rightward shift of the supply curve leads to a 6 percent decrease in the price and a 5 percent increase in the quantity demanded, the price elasticity of demand is

0.83.
0.30.
0.60.
1.20.

The price elasticity of demand equals

the percentage change in the quantity demanded divided by the percentage change in the price.
the change in the quantity demanded divided by the change in price.
the percentage change in the price divided by the percentage change in the quantity demanded.
the change in the price divided by the change in quantity demanded.

When the quantity of coal supplied is measured in kilograms instead of pounds, the demand for coal becomes

more elastic.
neither more nor less elastic.
less elastic.
undefined.

The price elasticity of demand measures

the slope of a budget curve.
how often the price of a good changes.
the responsiveness of the quantity demanded to changes in price.
how sensitive the quantity demanded is to changes in demand.

The price elasticity of demand depends on

the units used to measure price but not the units used to measure quantity.
the units used to measure price and the units used to measure quantity.
the units used to measure quantity but not the units used to measure price.
neither the units used to measure price nor the units used to measure quantity.

The slope of a demand curve depends on

the units used to measure quantity but not the units used to measure price.
the units used to measure price and the units used to measure quantity.
the units used to measure price but not the units used to measure quantity.
neither the units used to measure price nor the units used to measure quantity.

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Elasticity

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