WorksheetsEco Ch. 4 Elasticity in Economic Terms Quiz
Total questions: 65
Worksheet time: 33mins
What is elasticity in economic terms?
The measure of responsiveness of quantity demanded to a change in price
The measure of the economy's overall performance
A type of economic policy
The measure of tax revenue
What can elasticity help us understand?
The effectiveness of marketing strategies
The impact of price changes on demand and supply
The political stability of a country
The cultural influences on consumer behavior
How is the price elasticity of demand related to the demand curve?
It determines the slope of the demand curve
It is unrelated to the demand curve
It dictates the number of products in the market
It is the same as the supply curve
What does the price elasticity of demand indicate about revenue and expenditure?
It predicts government spending
It shows the relationship between consumer income and spending
It indicates how revenue and expenditure change with price
It is used to calculate gross domestic product
What is the price elasticity of supply?
The measure of how much the quantity supplied of a good responds to a change in the price of that good
The measure of how much the quantity demanded of a good responds to a change in income
The measure of how much the quantity supplied of a good responds to a change in technology
The measure of how much the quantity demanded of a good responds to a change in the price of another good
How is the price elasticity of supply related to the supply curve?
It determines the position of the supply curve on a graph
It is the same as the demand curve
It determines the slope of the supply curve
It is unrelated to the supply curve
What are the income and cross-price elasticities of demand?
They measure the change in demand due to changes in technology and production costs
They measure the change in demand due to changes in consumer preferences and tastes
They measure the change in demand due to changes in the prices of related goods and consumer income
They measure the change in demand due to changes in government policies and regulations
What does elasticity measure in economic terms?
The financial stability of a company
The responsiveness of quantity demanded or quantity supplied to a change in one of its determinants
The total revenue of a market
The cost of production for goods and services
What is price elasticity of demand?
The change in price when the quantity demanded remains constant
The ratio of the change in quantity demanded to the change in price
How much the quantity demanded of a good responds to a change in the price of that good
The change in quantity demanded when there is no change in price
Loosely speaking, what does price elasticity of demand measure?
The price-sensitivity of sellers' supply
The price-stability of a market
The price-sensitivity of buyers' demand
The price-variability over time
What is the formula for calculating price elasticity of demand?
Price elasticity of demand = percentage change in Q / percentage change in P
Price elasticity of demand = percentage change in P / percentage change in Q
Price elasticity of demand = (percentage change in P * percentage change in Q) / 100
Price elasticity of demand = percentage change in P + percentage change in Q
If the price of a product rises by 10% and the quantity demanded falls by 15%, what is the price elasticity of demand?
0.67
1.5
2.0
1.0
According to the graph, what happens to P and Q along a demand curve?
P and Q move in the same direction.
P and Q move in opposite directions.
P and Q remain constant.
P increases and Q also increases.
Why are price elasticities reported as positive numbers?
Because price elasticity is always a positive value.
Because the minus sign is dropped to report all price elasticities as positive numbers.
Because price elasticity cannot be negative.
Because the demand curve is always upward sloping.
What is the standard method of computing the percentage (%) change?
(End value + Start value) / Start value × 100%
(End value - Start value) / End value × 100%
(End value - Start value) / Start value × 100%
(Start value - End value) / Start value × 100%
What is the percentage change in price (P) when going from point A to point B on the graph?
20%
25%
-20%
-25%
What is the percentage change in quantity (Q) when going from point A to point B on the graph?
33%
-33%
50%
-50%
What is the price elasticity when going from point A to point B?
1.33
2.5
0.8
1.25
What is the price elasticity when going from point B to point A?
1.33
2.5
0.8
1.25
What does the midpoint method calculate in the context of price elasticity of demand?
The exact price at which demand is highest
The average price between the highest and lowest prices
The number halfway between the start and end values of price or quantity
The total revenue generated from the sale of goods
How is the percentage change in quantity or price calculated using the midpoint method?
(end value - start value) / start value × 100%
(start value - end value) / end value × 100%
(end value - start value) / midpoint × 100%
(start value + end value) / 2 × 100%
Which formula represents the price elasticity of demand using the midpoint method?
Price elasticity of demand = (Q2 - Q1) / [(Q2 + Q1) / 2]
Price elasticity of demand = (P2 - P1) / [(P2 + P1) / 2]
Price elasticity of demand = (Q2 - Q1) / [(P2 + P1) / 2]
Price elasticity of demand = (P2 - P1) / [(Q2 + Q1) / 2]
What is the percentage change in price (P) when using the midpoint method of computing percentage changes?
22.2%
40%
1.8%
25%
What is the percentage change in quantity (Q) when using the midpoint method of computing percentage changes?
22.2%
40%
1.8%
25%
Using the midpoint method, what is the price elasticity of demand for your websites?
22.2%
40%
1.8%
25%
What is the quantity demanded for iPhones when the price is $400?
8,400
10,600
10,000
9,200
What is the quantity demanded for iPhones when the price is $600?
8,400
10,600
10,000
9,200
Which method is suggested to calculate percentage changes in the given information?
Average method
Midpoint method
Endpoint method
Percentage point method
What is the percentage change in price (P) when using the midpoint method to calculate percentage changes?
20%
40%
50%
60%
What is the percentage change in quantity demanded (Qd) when using the midpoint method to calculate percentage changes?
23.16%
17.65%
40%
50%
Using the midpoint method, what is the price elasticity of demand if the percentage change in quantity demanded (Qd) is 23.16% and the percentage change in price (P) is 40%?
0.58
0.75
1.25
1.50
What are we trying to determine when we look at the price elasticity of demand for two common goods with a 20% price increase?
The effect on the supply of the goods
The determinants of price elasticity of demand
The change in consumer income
The overall market demand for the goods
When the prices of both goods rise by 20%, what are we trying to find out?
The good with the lowest production cost
The good with the highest price elasticity of demand
The good with the most substitutes available
The good with the highest consumer preference
What is the purpose of comparing the price elasticity of demand for two common goods when their prices increase by 20%?
To understand the impact on the producer surplus
To analyze the change in market equilibrium
To learn about the determinants of price elasticity of demand
To calculate the total revenue for each good
What happens to the demand for a good when it has close substitutes and its price increases?
The demand increases significantly.
The demand does not change.
The demand decreases as buyers switch to substitutes.
The demand decreases because the good becomes a luxury item.
Why would the demand for sunscreen not change significantly if its price rises by 20%?
Because sunscreen is a luxury good.
Because sunscreen has many close substitutes.
Because sunscreen is a necessity with no close substitutes.
Because the demand for sunscreen is perfectly elastic.
What is the relationship between price elasticity of demand and the availability of substitutes?
Price elasticity is lower when there are more substitutes available.
Price elasticity is unaffected by the availability of substitutes.
Price elasticity is higher when there are no substitutes available.
Price elasticity is higher when close substitutes are available.
If the prices of both blue jeans and clothing rise by 20%, for which good does the quantity demanded drop the most?
Blue jeans
Clothing
Both equally
Cannot be determined from the information given
Why does the quantity demanded drop more for blue jeans than for clothing when prices rise?
Because blue jeans are a luxury item
Because there are many substitutes for blue jeans
Because clothing is not a necessary good
Because the price of blue jeans rises more than the price of clothing
Price elasticity is generally higher for which type of goods?
Narrowly defined goods
Broadly defined goods
Goods with no substitutes
Goods with a fixed price
If the price of both insulin and yachts rises by 20%, for which good does the quantity demanded drop the most, and why?
Insulin, because it is a luxury.
Yachts, because it is a luxury.
Insulin, because it is a necessity.
Yachts, because it is a necessity.
Why would a rise in the price of insulin cause little or no decrease in demand?
Because insulin is a luxury good.
Because insulin is a necessity for diabetics.
Because the price elasticity for insulin is high.
Because people can easily find alternatives to insulin.
Which type of good typically has higher price elasticity?
Necessities
Luxuries
Both have the same price elasticity
Neither, as price elasticity is not related to the type of good
What happens to the quantity demanded of gasoline when the price rises by 20%?
It drops more in the short run than in the long run.
It drops more in the long run than in the short run.
It remains unchanged in both the short run and the long run.
It increases in the short run.
Why is there not much change in the quantity demanded of gasoline in the short run?
People can easily switch to alternative fuels.
There are many substitutes for gasoline.
People have limited options like riding the bus or carpooling.
Gasoline is not an essential commodity.
What are some of the actions people might take in the long run in response to a rise in gasoline prices?
Increase the use of gasoline.
Buy larger cars.
Buy smaller cars or live closer to work.
Stop using cars altogether.
Is price elasticity of gasoline higher in the short run or in the long run?
Short run
Long run
It is the same in both the short run and the long run.
Price elasticity is not related to time periods.
When the price elasticity of demand is greater than 1, how is the demand described?
Demand is inelastic
Demand has unit elasticity
Demand is elastic
Demand is perfectly elastic
If the price elasticity of demand equals 1, what type of elasticity does the demand have?
Perfect elasticity
Inelastic demand
Elastic demand
Unit elasticity
What does it mean when the price elasticity of demand is less than 1?
The demand is perfectly inelastic
The demand is elastic
The demand is inelastic
The demand has unit elasticity
What is the price elasticity of demand when the demand is perfectly inelastic?
A) 0
B) 1
C) Infinity
D) Undefined
How is the demand curve described when the demand is perfectly elastic?
A) Vertical
B) Horizontal
C) Upward sloping
D) Downward sloping
What happens to the price elasticity of demand as the demand curve becomes flatter?
A) It decreases
B) It remains constant
C) It increases
D) It becomes undefined
What does a perfectly inelastic demand curve indicate about consumers' price sensitivity?
High sensitivity to price changes
Some sensitivity to price changes
No sensitivity to price changes
The demand curve is not related to price sensitivity
In the context of perfectly inelastic demand, what is the elasticity of demand?
1
0
Infinity
-1
How is the demand curve represented graphically in the case of perfectly inelastic demand?
Horizontal line
Upward sloping line
Downward sloping line
Vertical line
If the price falls by 10%, what is the percentage change in quantity demanded in the case of perfectly inelastic demand?
10% increase
10% decrease
0% change
Cannot be determined from the given information
What does a relatively steep demand curve indicate about the price elasticity of demand?
The price elasticity of demand is greater than 1.
The price elasticity of demand is less than 1.
The price elasticity of demand is equal to 1.
The price elasticity of demand cannot be determined from the steepness of the demand curve.
If the price falls by 10% and the quantity demanded rises less than 10%, how is the demand characterized?
Elastic demand
Inelastic demand
Unitary elastic demand
Perfectly elastic demand
What is the elasticity of demand when the percentage change in quantity demanded is less than the percentage change in price?
Elasticity > 1
Elasticity < 1
Elasticity = 1
Elasticity = 0
When consumers' price sensitivity is relatively low, what does it imply about the elasticity of demand?
The elasticity of demand is high.
The elasticity of demand is low.
The elasticity of demand is unitary.
The elasticity of demand is perfectly inelastic.
What is the price elasticity of demand when the percentage change in quantity demanded is equal to the percentage change in price?
Greater than 1
Less than 1
Equal to 0
Equal to 1
What type of price sensitivity is indicated by a unit elastic demand curve?
High price sensitivity
Low price sensitivity
Intermediate price sensitivity
No price sensitivity
If the price of a product falls by 10%, and the demand curve is unit elastic, by how much would the quantity demanded rise?
5%
10%
20%
15%
On a unit elastic demand curve, what is the slope of the demand (D) curve?
Perfectly elastic
Perfectly inelastic
Intermediate slope
Undefined slope
