Elasticity

The price elasticity of demand is a measure of

• the equilibrium price of a product.

•  buyers' responsiveness to changes in the price of a product.

• the amount of a product purchased when income increases.

• whether a product is a substitute or a complement.

To determine the price elasticity of demand, we

• need information on consumers' incomes.

• need to know how much is available.

• compare the percentage change in the quantity demanded to the percentage change in the price.

• compare the change in the quantity to the change in price.

Suppose the price of a box of cereal rises from $4 to $6. Using the midpoint method, what is the percentage change in price?

• 50 percent

• 40 percent

• 33 percent

• 67 percent

Suppose the local university charges $85 per credit hour. If tuition increases from $85 to $93 per credit hour, using the midpoint method, what is the percentage change in price?

• 8.99 percent

• 8.00 percent

• 9.41 percent

• 8.62 percent

When the percentage change in the quantity demanded exceeds the percentage change in price, then demand is

• inelastic.

• unit elastic.

• elastic.

• irrelevant.

 If the percentage change in price is 10 percent and the demand is elastic, then the percentage change in the quantity demanded

• is greater than 0 percent but less than 10 percent.

• is larger than 10 percent.

• equals 0 percent.

• equals 10 percent.

If a substitute good is easy to find, then demand for a good is

• elastic.

• inelastic.

• unit elastic

• perfectly elastic

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60. At the midpoint between these two prices, what is the price elasticity of demand?

• 1.0

• 1.25

• 1.90

• 40.0

The price elasticity of supply measures

• the percentage change in supply from a percentage change in demand.

• the extent to which the quantity supplied of a good changes when the price of a good changes, other things remaining the same

• the slope of the supply curve.

• how the equilibrium price changes in response to a change in the equilibrium quantity supplied.

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied, then the supply is

• elastic

• inelastic

• unit elastic

• perfectly elastic