review exercise_elasticity_sol

review exercise_elasticity_sol - Elasticity 5.The price...

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Elasticity 5.The price elasticity of demand measures how much a. quantity demanded responds to a change in price. b. quantity demanded responds to a change in income. c. price responds to a change in demand. d. demand responds to a change in supply. ANS: A PTS: 1 DIF: 1 REF: 5-1 TOP: Price elasticity of demand MSC: Definitional a. buyers do not respond much to a change in price. b. buyers respond substantially to a change in price, but the response is very slow. c. buyers do not alter their quantities demanded much in response to advertising, fads, or general changes in tastes. d. the demand curve is very flat. ANS: A PTS: 1 DIF: 2 REF: 5-1 TOP: Inelastic demand MSC: Definitional 13.For a good that is a luxury, demand a. tends to be inelastic. b. tends to be elastic. c. has unit elasticity. d. cannot be represented by a demand curve in the usual way. ANS: B PTS: 1 DIF: 2 REF: 5-1 TOP: Price elasticity of demand MSC: Interpretive 17.The demand for Chocolate Chip Cookie Dough ice cream is likely quite elastic because a. ice cream must be eaten quickly. b. this particular flavor of ice cream is viewed as a necessity by many ice-cream lovers. c. the market is broadly defined. d. other flavors of ice cream are good substitutes for this particular flavor. ANS: D PTS: 1 DIF: 2 REF: 5-1 TOP: Price elasticity of demand | Substitutes MSC: Interpretive 24.When the price of bubble gum is \$0.50, the quantity demanded is 400 packs per day. When the price falls to \$0.40, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for bubble gum is a. inelastic. b. elastic. c. unit elastic. d. perfectly inelastic. ANS: B PTS: 1 DIF: 2 REF: 5-1 TOP: Price elasticity of demand | Midpoint method MSC: Applicative 26.Suppose you calculate the price elasticity of demand for a certain good and you report that the elasticity is 0.8. The fact that the elasticity is a positive number means that a. when the price of the good increases, the quantity demanded increases in response. b. demand for the good is elastic.

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This note was uploaded on 09/15/2009 for the course ECON 201 taught by Professor Shoonlai during the Summer '09 term at Miami University.

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review exercise_elasticity_sol - Elasticity 5.The price...

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