Economics Week 5 Elasticity

Price elasticity of demand measures:

• the responsiveness of the quantity demanded of a good to a change in income

• the responsiveness of the quantity demanded of a good to a change in consumers’ preferences

• the responsiveness of the quantity demanded of a good to a one per cent change in price

• the reduction in the quantity demanded of a good when the price is reduced

• the responsiveness of the quantity demanded of a good to a change in the price of other goods

Using the midpoint formula, what would be the price elasticity of demand for a basketball if the number of basketballs fell from 7000 to 4000 per week after its price increased from $60 to $150?

• 0.254

• 1.250

• 0.801

• 0.636

• 2.540

Suppose the price of a bus ticket rises from $2.75 to $3 and the number of tickets sold falls from 10 000 to 8500. The price elasticity of demand is:

• elastic

• unitary elastic

• perfectly elastic

• inelastic

• perfectly inelastic

Suppose that the price of a bus ticket rises from $2.75 to $3.75 and the number of tickets sold falls from 9000 to 7800. The price elasticity of demand, in absolute term, is

• 0.464

• 1.000

• –0.527

• –1.000

• zero

The price elasticity of demand for a vertical demand curve is:

• perfectly elastic

• perfectly inelastic

• unitary elastic

• elastic

• inelastic

In Exhibit 5.1, the demand curve between points b and c is:

• price elastic

• price inelastic

• unit elastic

• perfectly elastic

• perfectly inelastic

In Exhibit 5.1, between points a and b, the price elasticity of demand measures:

• 0.67

• 1.5

• 2

• 1

• 0,5

In Exhibit 5.1, the demand curve between points b and c is:

• price elastic

• price inelastic

• unit elastic

• perfectly elastic

• perfectly inelastic

In Exhibit 5.1, between points b and c, the price elasticity of demand measures

• 4.27

• 1.5

• 1.56

• 0.636

• 1.67

The straight-line demand curve represents the price elasticity of demand that:

• increases as the price decreases

• decreases as the price decreases

• increases as the price increases

• decreases as the price increases

• does not change