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Chapter 5 Test Bank
Multiple Choice Questions
1. The price elasticity of demand measures the:
A. responsiveness of quantity demanded to a change in quantity supplied.
B. responsiveness of price to a change in quantity demanded.
C. responsiveness of quantity demanded to a change in price.
D. responsiveness of quantity demanded to a change in income.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
2. Price elasticity of demand is defined as:
A. the slope of the demand curve.
B. the slope of the demand curve divided by the price.
C. the percentage change in price divided by the percentage change in quantity demanded.
D. the percentage change in quantity demanded divided by the percentage change in price.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
3. Demand is said to be ___________ when the quantity demanded is very responsive to
changes in price.
A. elastic
B. unit elastic
C. inelastic
D. independent
Answer: A
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Easy Category: Understand
4. Demand is said to be _____________ when the quantity demanded is not very responsive to
changes in price.
A. independent
B. inelastic
C. unit elastic
D. elastic
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
5. Demand is said to be __________ when the quantity demanded changes at the same
proportion as the price.
A. elastic
B. unit elastic
C. inelastic
D. independent
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
6. The elasticity of demand is defined as the percentage change in quantity demanded divided
by the percentage change in __________.
A. quantity supplied
B. the slope of the demand curve
C. price
D. the slope in the supply curve
Answer: C
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Easy Category: Understand
7. When demand is inelastic:
A. price elasticity of demand is greater than 1.
B. consumers are not very responsive to changes in price.
C. the percentage change in quantity demanded resulting from a price change is greater than
the percentage change in price.
D. demand curves appear to be fairly flat.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
8. Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results
in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand
facing Billy Bob's Barber Shop?
A. 0.15
B. 3.0
C. 0.10
D. 0.05
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
9. If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply
will cause the equilibrium price to:
A. rise and the equilibrium quantity to fall.
B. rise and the equilibrium quantity to stay the same.
C. rise and the equilibrium quantity to rise.
D. stay the same and the equilibrium quantity to fall.
Answer: B
Reference:
Explanation:
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Chapter 5 Test Bank
Multiple Choice Questions
1. The price elasticity of demand measures the:
A. responsiveness of quantity demanded to a change in quantity supplied.
B. responsiveness of price to a change in quantity demanded.
C. responsiveness of quantity demanded to a change in price.
D. responsiveness of quantity demanded to a change in income.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
2. Price elasticity of demand is defined as:
A. the slope of the demand curve.
B. the slope of the demand curve divided by the price.
C. the percentage change in price divided by the percentage change in quantity demanded.
D. the percentage change in quantity demanded divided by the percentage change in price.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
3. Demand is said to be ___________ when the quantity demanded is very responsive to
changes in price.
A. elastic
B. unit elastic
C. inelastic
D. independent
Answer: A
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Easy Category: Understand
4. Demand is said to be _____________ when the quantity demanded is not very responsive to
changes in price.
A. independent
B. inelastic
C. unit elastic
D. elastic
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
5. Demand is said to be __________ when the quantity demanded changes at the same
proportion as the price.
A. elastic
B. unit elastic
C. inelastic
D. independent
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
6. The elasticity of demand is defined as the percentage change in quantity demanded divided
by the percentage change in __________.
A. quantity supplied
B. the slope of the demand curve
C. price
D. the slope in the supply curve
Answer: C
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Easy Category: Understand
7. When demand is inelastic:
A. price elasticity of demand is greater than 1.
B. consumers are not very responsive to changes in price.
C. the percentage change in quantity demanded resulting from a price change is greater than
the percentage change in price.
D. demand curves appear to be fairly flat.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
8. Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results
in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand
facing Billy Bob's Barber Shop?
A. 0.15
B. 3.0
C. 0.10
D. 0.05
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
9. If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply
will cause the equilibrium price to:
A. rise and the equilibrium quantity to fall.
B. rise and the equilibrium quantity to stay the same.
C. rise and the equilibrium quantity to rise.
D. stay the same and the equilibrium quantity to fall.
Answer: B
Reference:
Explanation:
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