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Other, Business, Social Studies
11th -
12thgrade
1.2 Price Elasticity of Demand (PED)
45 questions
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- 1. Multiple ChoiceDemand is almost always more elastic at higher prices and less elastic at lower prices.TrueFalse
- 2. Multiple ChoiceElasticity of demand is greater in the short-runtruefalse
- 3. Multiple ChoiceDemand is unit elastic if it is less than 1.0TrueFalse
- 4. Multiple ChoiceSuppose that elasticity of demand of socks is 0.7. If the price of socks is reduced by 10%, how will sales be effected?sales will grow by more than 10%Sales will grow by 10%Sales will grow by less than 10%Sales will decrease by 10%
- 5. Multiple ChoiceIf the price on a product goes up the quantity demanded will go down. This follows the economic theory of:Law of Demandelasticityincome effectNone of the above
- 6. Multiple ChoiceThe formula for calculating elasticity of demand is:The % change in price over the % change in quantity demandedThe % change in quantity demanded over the % change in priceThe change in price over the change in quantity demanedThe change in quantity demanded over the change in price
- 7. Multiple ChoiceThe elasticity of demand for tissues is 0.66. This means the demand for tissues iselasticunit elasticinelasticreally expensive
- 8. Multiple Choicewhich of the following is not a determinant of demand elasticity?availability of substitutesshare of consumer's budget spend on goodduration of adjustment periodgovernment spending
- 9. Multiple ChoiceIf the price on a product goes up the quantity demanded will go down. This follows the economic theory of:Law of DemandelasticityCeteris ParibusBoth A and C
- 10. Multiple ChoiceThe following is a factor that will not cause the demand curve to shift:AdvertisingPopulationPriceConsumer expectations
- 11. Multiple ChoiceConsuming more of one good because of a change in price of another good is known as theincome effectsubstitution effectelasticity effectdemand effect
- 12. Multiple ChoiceWhich factor causes the demand curve to shift in the following situation: Bobby graduated from college and got a good job, so he decided to buy a new 2016 Passat.incomepopulationconsumer tastes & advertisingprices of related goods
- 13. Multiple Choice
What does it mean?
Ed = 0
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 14. Multiple Choice
What does it mean?
Ed = 1
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 15. Multiple Choice
What does it mean?
Ed = ∞
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 16. Multiple Choice
What does it mean?
Ed > 1
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 17. Multiple Choice
What does it mean?
Ed < 1
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 18. Multiple Choice
What does it mean?
% change in Qd = % change in P
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 19. Multiple Choice
Describe your demand for a product if you buy the same amount of it or just a small amount less after a large price increase.
elastic
unitary elastic
inelastic
hyperelastic
- 20. Multiple Choice
Why does demand generally become more elastic over time?
People don't change their shopping behavior over time.
Few substitutes become available.
People buy more products over time.
People have time to find substitutes and change behaviors.
- 21. Multiple Choice
If P = $10 for Tiny Tee-shirts, Q = 20, but if P = $5, Q = 25. The price elasticity of demand for Tiny Tee-shirts is:
3.0.
1/3
1/2
21
- 22. Multiple Choice
If the price of Kellogg's Corn Flakes goes up from $1.89 to $2.05 and quantity demanded changes from 250 to 210, then the price elasticity of demand would be:
0.47
0.02
250
2.14
- 23. Multiple Choice
Alyssa’s Floral Shoppe dropped its prices for a dozen roses from $45 to $35 this year. Because of this decrease in price, the quantity sold increased from 1000 to 1500. The price elasticity of demand for Alyssa’s roses is:
1.00.
1.6.
0.625.
2.25
- 24. Multiple Choice
The income elasticity of demand is a measure of the:
relative responsiveness of quantity demanded to changes in income.
absolute change in demand yielded by an absolute change in income.
slope of the income-consumption curve.
negative slope of a market demand curve.
- 25. Multiple Choice
If the income elasticity of market demand is negative, most consumers view the good as:
a luxury good
having many imperfect substitutes.
an inferior good.
) a normal good.
- 26. Multiple Choice
If average income rises from $18,000 per year to $22,000 per year and annual gasoline consumption per household rises from 1000 to 1500 gallons, the income elasticity of demand for gas is:
in the inferior range
0.5
1
2
- 27. Multiple Choice
If two goods have negative price cross‑elasticities of demand, the goods are:
inferior goods.
luxury goods.
complementary goods:
substitute goods.
- 28. Multiple Choice
If a price hike from $15 to $20 for DVD disks causes sales of DVD players to fall from 100 to 50 units, the coefficient of cross-elasticity of demand between these goods is roughly:
‑1/10.
‑10.
- 7/3.
-3/7.
- 29. Multiple Choice
A 2% price cut for doodads causes gizmo sales to fall by 3%. The price cross elasticity of demand between these goods is roughly _____ and these goods are _____.
‑2/3, substitutes.
1.5, substitutes.
2/3, complements.
‑1.5, complements.
- 30. Multiple Choice
If Ford raises pickup truck prices 20% and Chevy pickup sales rise 12%, then these goods are _____ and their cross elasticity coefficient is roughly _____.
complements; ‑0.6.
substitutes; 0.6.
substitutes; ‑1.67.
inferior; 1.67.
- 31. Multiple Choice
The percentage change in quantity supplied divided by the percentage change in price is a rough measure of a good's:
unitary margin.
price elasticity of supply.
exclusivity ratio.
price elasticity of demand.
- 32. Multiple Choice
The graph of a demand curve that is perfectly elastic is:
positively sloped.
horizontal.
vertical
negatively sloped.
- 33. Multiple Choice
If a change in the supply of a good results in a percentage change in quantity demanded that exceeds in absolute value the percentage change in price, then demand is relatively:
price elastic.
inferior.
normal.
price inelastic
- 34. Multiple Choice
Which of the following suggest that supply is most price elastic?
A pay hike from $400 to $800 monthly raises military enlistees from 12,000 to 28,000 monthly
A 20% increase in goat milk production follows a 40% rise in the price of cow milk.
Per bushel wheat prices fall from $8 to $5; production drops from 460 to 340 million tons.
Income rises from $2,500 to $3,500 and auto sales rise from 6 to 18 million annually.
- 35. Multiple Choice
Price elasticities of demand tend to
fall as higher prices are charged.
rise as higher prices are charged.
almost always be constant.
not be related to the length of time.
- 36. Multiple Choice
Water has seen an increase in demand 8% this summer, while the price has decreased 12%
1.5 inelastic
1.5 elastic
.67 inelastic
.67 elastic
- 37. Multiple Choice
Wheat has seen a decrease in demand of 5%, while the price has increased 7%
1.4 inelastic
1.4 elastic
.71 inelastic
.71 elastic
- 38. Multiple Choice
Oil has seen a decrease in demand of 9%, while the price has increased 13%
1.44 inelastic
1.44 elastic
.69 inelastic
.69 elastic
- 39. Multiple Choice
Prada has seen a increase in demand of 70%, while the price has decreased 35%
.5 inelastic
.5 elastic
2 inelastic
2 elastic
- 40. Multiple Choice
Red Wing Shoes has seen a decrease in demand of 40%, while the price has increased 20%
.5 inelastic
.5 elastic
2 inelastic
2 elastic
- 41. Multiple ChoiceDemand is almost always more elastic at higher prices and less elastic at lower prices.TrueFalse
- 42. Multiple ChoiceThe formula for calculating elasticity of demand is:The % change in price over the % change in quantity demandedThe % change in quantity demanded over the % change in priceThe change in price over the change in quantity demanedThe change in quantity demanded over the change in price
- 43. Multiple ChoiceIf the price on a product goes up the quantity demanded will go down. This follows the economic theory of:Law of Demandelasticityincome effectNone of the above
- 44. Multiple ChoiceSuppose that elasticity of demand of socks is 0.7. If the price of socks is reduced by 10%, how will sales be effected?sales will grow by more than 10%Sales will grow by 10%Sales will grow by less than 10%Sales will decrease by 10%
- 45. Multiple Choicewhich of the following is not a determinant of demand elasticity?availability of substitutesshare of consumer's budget spend on goodduration of adjustment periodgovernment spending
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