Elasticity of demand

Elasticity of demand

by Kendrick Broadus

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The elasticity of demand _______________________ when other factors change

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__________________ measures how sensitive consumers are to a change in price.

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Inelastic demand means consumers are ___________ to a change in price.

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When measuring percent changes, __________________________________. The midpoint method eliminates this problem.

Multiple Choice

The price elasticity of demand measures how much

• quantity demanded responds to a change in price.

• quantity demanded responds to a change in income.

• price responds to a change in demand.

• demand responds to a change in supply.

Multiple Choice

After an economic boom, will the demand curve for TVs be more elastic or more inelastic?

• More elastic

• More inelastic

Multiple Choice

After the invention of nuclear power plants, will the demand curve for coal power plants be more elastic or more inelastic?

• More elastic

• More inelastic

Multiple Choice

Which of the following two goods is more likely to be inelastically demanded?

• Demand for insulin

• Demand for vitamins

Multiple Choice

How does elasticity affect potential revenue for a firm?

• If demand for a good is inelastic, lowering the price could raise revenue.

• If demand for a good is inelastic, raising the price could reduce revenue.

• If demand for a good is elastic, raising the price must increase revenue.

• If demand for a good is elastic, raising the price could reduce revenue.

Multiple Choice

Demand is almost always more elastic at higher prices and less elastic at lower prices.

• True

• False

Multiple Choice

Demand is unit elastic if it is less than 1.0

• True

• False

Multiple Choice

If the price on a product goes up the quantity demanded will go down. This follows the economic theory of:

• Law of Demand

• elasticity

• income effect

• None of the above

Multiple Choice

The formula for calculating elasticity of demand is:

• The % change in price over the % change in quantity demanded

• The % change in quantity demanded over the % change in price

• The change in price over the change in quantity demaned

• The change in quantity demanded over the change in price

Multiple Choice

The elasticity of demand for tissues is 0.66. This means the demand for tissues is

• elastic
• unit elastic
• inelastic
• really expensive

Multiple Choice

which of the following is not a determinant of demand elasticity?

• availability of substitutes
• share of consumer's budget spend on good
• duration of adjustment period
• government spending

Multiple Choice

The following is a factor that will not cause the demand curve to shift:

• Advertising
• Population
• Price
• Consumer expectations

Multiple Choice

Which factor causes the demand curve to shift in the following situation: Bobby graduated from college and got a good job, so he decided to buy a new 2016 Passat.

• income
• population
• consumer tastes & advertising
• prices of related goods

Multiple Choice

What does it mean?

Ed = ∞

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

• Perfectly elastic demand

Multiple Choice

What does it mean?

Ed > 1

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

Multiple Choice

What does it mean?

Ed < 1

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

• Perfectly elastic demand

Multiple Choice

Describe your demand for a product if you buy the same amount of it or just a small amount less after a large price increase.

• elastic

• unitary elastic

• inelastic

• hyperelastic

Multiple Choice

Why does demand generally become more elastic over time?

• People don't change their shopping behavior over time.

• Few substitutes become available.

• People buy more products over time.

• People have time to find substitutes and change behaviors.

Multiple Choice

Which of the following is an example of inelastic demand?

• Jason wants the most expensive cellphone. He decides to get a cheaper model.

• Priya wants to go to the season-opening game. Tickets to another game cost less, but she still buys tickets for the opener.

• Tianna wants to try out a new, expensive restaurant. She goes to another restaurant whose food is excellent and costs less.

• Shawn wants to buy a house in one neighborhood. But after searching, he decides to buy a house elsewhere instead.

Multiple Choice

How does elasticity affect potential revenue for a firm?

• If demand for a good is inelastic, lowering the price could raise revenue.

• If demand for a good is inelastic, raising the price could reduce revenue.

• If demand for a good is elastic, raising the price must increase revenue.

• If demand for a good is elastic, raising the price could reduce revenue.

Multiple Choice

Which of the following two goods is more likely to be inelastically demanded?

• Demand for tangerines

• Demand for fruit

Multiple Choice

Which of the following two goods is more likely to be inelastically demanded?

• Demand for Exxon gasoline at the corner of 7th and Grand

• Demand for gasoline in the entire city

Multiple Choice

Which of the following two goods is more likely to be inelastically demanded?

• Demand for insulin

• Demand for vitamins

Multiple Choice

During the COVID 19 Pandemic we are all experiencing now, and the information campaign from the Center for Disease Control highlighting that bacteria and other organisms cause and spread disease, will the demand curve for soap be more elastic or more inelastic?

• More elastic

• More inelastic

Multiple Choice

After more employers allow employees to telecommute, will the demand curve for cars be more elastic or more inelastic?

• More elastic

• More inelastic