Micro-Economics Ch 6 Questions

Micro-Economics Ch 6 Questions - Name: _ Date: _ 1. The...

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Date: _____________ 1. The publisher of an economics textbook finds that when the book's price is lowered from $70 to $60, sales rise from 10,000 to 15,000. Using the midpoint method, you can calculate that the price elasticity of demand is: A) 500. B) 50%. C) 3.5. D) 2.6. 2. When price goes down, the quantity demanded goes up. Price elasticity measures how: A) much the price goes down. B) much the quantity goes up. C) responsive the price change is in relation to the quantity change. D) responsive the quantity change is in relation to the price change. 3. If the price of a good is increased by 20% and the quantity demanded changes by 15%, then the price elasticity of demand is equal to: A) 0.75. B) approximately 0.33. C) approximately 1.33. D) 1. 4. Using the midpoint method of elasticity to calculate the price elasticity of demand eliminates the problem of computing: A) different elasticities, depending on whether price decreases or increases. B) different elasticities because price and quantity are inversely related on the demand curve. C) total revenue when price falls and demand is inelastic. D) total revenue when price falls and demand is elastic. 5. If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 190 bags to 210 bags, this indicates that, if other things are unchanged, the price elasticity of demand using the midpoint method is: A) 0. B) 0.5. C) 1. D) 2. 6. The price elasticity of demand is computed as the percentage change in: A) quantity demanded divided by the percentage change in quantity supplied. B) price divided by the percentage change in quantity demanded. C) quantity demanded divided by the percentage change in income. D) quantity demanded divided by the percentage change in price. Page 1
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Micro-Economics Ch 6 Questions - Name: _ Date: _ 1. The...

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