Unit 2 Chapter 4 Elasticity

What happens to the equilibrium price and quantity when supply decreases?

• The equilibrium price decreases and the quantity increases.

• The equilibrium price and quantity both increase.

• The equilibrium price rises and the equilibrium quantity decreases.

• The equilibrium price and quantity both decrease.

If the quantity demanded of a good is very responsive to a change in its price, how does the equilibrium quantity change?

• The equilibrium quantity changes a lot.

• The equilibrium quantity does not change.

• The equilibrium quantity changes very little.

• The equilibrium quantity changes in the opposite direction of the price change.

What is the price elasticity of demand?

• A measure of how the quantity demanded of a good responds to a change in the price of another good.

• A units-free measure of the responsiveness of the quantity demanded of a good to a change in its price, holding all other influences on buying plans constant.

• A measure of the total revenue change when there is a price change.

• A measure of the change in supply when there is a change in demand.

Why can't the responsiveness of quantity demanded to a price change be compared by looking at the slopes of two demand curves for different goods?

• Because the slopes of demand curves are always the same for all goods.

• Because the units of measurement for different goods are unrelated.

• Because the price of one good does not affect the demand for another good.

• Because the demand curves for different goods are always flat.

What happens to the equilibrium price and quantity when supply decreases?

• The equilibrium price decreases and the quantity increases.

• The equilibrium price and quantity both increase.

• The equilibrium price rises and the equilibrium quantity decreases.

• The equilibrium price and quantity both decrease.

If the quantity demanded of a good is very responsive to a change in price, how does it affect the equilibrium quantity?

• The equilibrium quantity changes a lot.

• The equilibrium quantity does not change.

• The equilibrium quantity decreases slightly.

• The equilibrium quantity remains the same.

What is the price elasticity of demand?

• A measure of how the quantity demanded of a good responds to a change in the quantity of the good.

• A units-free measure of the responsiveness of the quantity demanded of a good to a change in its price, with all other influences on buying plans remaining the same.

• A measure of how the equilibrium price of a good responds to a change in supply.

• A measure of the change in supply of a good when its price changes.

Why can't the responsiveness of quantity demanded to a price change be compared by looking at the slopes of two demand curves for different goods?

• Because the units of measurement for different goods are unrelated.

• Because the price of different goods is always the same.

• Because the demand for different goods is always constant.

• Because the quantity demanded for different goods does not change with price.

What does it mean when the price elasticity of demand is a units-free measure?

• It means that the elasticity is measured in units of currency.

• It means that the elasticity is measured in units of quantity.

• It means that the percentage change in each variable is independent of the units in which it is measured.

• It means that the elasticity can only be calculated using units of measurement.

What is the price elasticity of demand if the quantity demanded remains constant when the price changes?

• Zero, indicating perfectly inelastic demand.

• One, indicating unit elastic demand.

• Negative, indicating elastic demand.

• Positive, indicating inelastic demand.