Test Bank ECON 211 Chapter 5 Elasticity

Chapter 5 y Elasticity

5.1 PriceyElasticityyofyDemand
1y Multipley Choice

Refery toy they informationy providedy iny Figurey 5.1y belowy toy answery they questionsy thaty follow.




Figurey 5.1

1) Refery toy Figurey 5.1.y They demandy fory ticketsy is
A) perfectlyy pricey elastic. B)y perfectlyy pricey inelastic.
C)yunitypriceyelastic.

D)yperfectlyyincomeyinelastic.yAnswer:y B
Diff:y1
Topic:y PriceyElasticityyofyDemandyS
kill:y Fact

2) Demandy determinesy pricey entirelyy when
A) demandy isy downwardy sloping. B)y demandy isy perfectlyy inelastic.
C)ysupplyyisyperfectlyyinelastic.

D)ysupplyyisyperfectlyyelastic.yAnswer:y C
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Definition

3) Ay perfectlyy pricey elasticy demandy curvey willy bey ay yline.
A) horizontal B)y vertical
C)ypositivelyysloped

D)ynegativelyyslopedyAnswer:y A
Diff:y1
Topic:y PriceyElasticityyofyDemandyS
kill:y Fact




1

,4) Ay perfectlyy pricey elasticy supplyy curvey isy ay yline.
A) horizontal B)y vertical
C)ypositivelyysloped

D)ynegativelyyslopedyAnswer:y B
Diff:y1
Topic:y PriceyElasticityyofyDemandyS
kill:y Fact

5) Whenytheypriceyofyradiosydecreasesy5%,yquantityydemandedyincreasesy5%.yTheypriceyelasticityy ofydemand
yforyradiosyisy yandytotalyrevenueyfromyradioysalesywilly y.

A) elastic;y decrease B)y elastic;y increase
C)yinelastic;ydecrease

D)yunityelastic;ynotychangeyAnswer:y D
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Analytic
AACSB:y AnalyticySkills

6) Whenytheypriceyofyfreshyfishyincreasesy10%,yquantityydemandedydecreasesy5%.yTheypriceyelasticityyofy
demandyforyfreshyfishyisy yandytotalyrevenueyfromyfreshyfishysalesywill

y.

A) inelastic;y increase B)y inelastic;y decrease
C)yelastic;ydecrease

D)yelastic;yincreaseyAnswer:y A
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Definition
AACSB:y AnalyticySkills

7) Whenytheypriceyofyfreshyfishyincreasesy10%,yquantityydemandedyisyunchanged.yTheypriceyelasticityyo
fydemandyforyfreshyfishyis
A) perfectlyy inelastic. B)y elastic.
C)y inelastic. D)y unitaryy elastic.
Answer:y A
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Definition
AACSB:y AnalyticySkills

8) Whenytheypriceyofycoffeeyincreasesy5%,yquantityydemandedydecreasesy10%.yTheypriceyelasticityy ofydemand
yforycoffeeyisy yandytotalyrevenueyfromycoffeeysalesywilly y.

A) inelastic;y increase B)y inelastic;y decrease
C)yelastic;yincrease

D)yelastic;ydecreaseyAnswer:y D
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Definition
AACSB:y AnalyticySkills




2

, 9) TheyABCyComputeryCompanyywantsytoyincreaseytheyquantityyofycomputersyitysellsybyy5%.yIfytheypriceyelastic
ityyofydemandyisy-2.5,ytheycompanyymust
A) increasey pricey byy 2.0%. B)y decreasey pricey byy 2.0%.
C)yincreaseypriceybyy0.5%.

D)ydecreaseypriceybyy0.5%.yAnswer:y B
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Analytic
AACSB:y AnalyticySkills

10) Aygovernmentywantsytoyreduceyelectricityyconsumptionybyy10%.yTheypriceyelasticityyofydemandyforyelectricit
yyisy-5.yTheygovernmentymusty ytheypriceyofyelectricityybyy .
A) raise;y2.0% B)yraise;y0.5% C)yraise;y1.25%
D)ylower;y0.5%yAnswer:y A
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Analytic
AACSB:y AnalyticySkills

11) Aygovernmentywantsytoyreduceyelectricityyconsumptionybyy5%.yTheypriceyelasticityyofydemandyforyelectricit
yyisy-0.5.yTheygovernmentymusty ytheypriceyofyelectricityybyy .
A) raise;y10.0% B)yraise;y1.0% C)yraise;y0.1%
D)ylower;y0.5%yAnswer:y A
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Analytic
AACSB:y AnalyticySkills

12) TheypriceyelasticityyofydemandyforybottledywateryinyTexasyisy-2,yandytheypriceyelasticityyofydemandyforybo
ttledywateryinyCaliforniayisy-0.5.yInyotherywords,ydemandyinyTexasyisy
yandydemandyinyCaliforniayisy

.
A) elastic;y inelastic B)y inelastic;y elastic
C)yelastic;yunityelastic

D)yinelastic;yunityinelasticyAnswer:y A
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Conceptual
AACSB:y AnalyticySkills

13) Theypriceyelasticityyofydemandyforyheartytransplantsyisyperfectlyyinelastic.y Thus,ytheypriceyelasticityyd
emandyforyheartytransplantsyis
A) 0.0. B)y 1.0. C)y -1.0. D)y -100.0.
Answer:y A
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Analytic
AACSB:y AnalyticySkills




3

, 2y True/False

1) Priceyelasticityyofydemandyisycalculatedyusingytheychangeyinyquantityydemandedyandytheychangeyinypr
ice.
Answer:y FALSE
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Definition

2) Theypriceyelasticityyofydemandyisygenerallyynegativeytoyreflectytheyindirectyrelationshipybetweenytheyquantityy
demandedyofyaygoodyandyitsyprice.
Answer:y TRUE
Diff:y2
Topic:y PriceyElasticityyofyDemandyS
kill:y Definition

3) Perfectlyyinelasticydemandyisyrepresentedyasyayverticalyline.yAnswer
:y TRUE
Diff:y1
Topic:y PriceyElasticityyofyDemandyS
kill:y Fact

4) Perfectlyyelasticydemandyisyrepresentedyasyayhorizontalyline.yAnswer
:y TRUE
Diff:y1
Topic:y PriceyElasticityyofyDemandyS
kill:y Fact




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