1. The absolute value of the short-run elasticity of demand for bread has been estimated to be 0.15. Its long-run elasticity of demand is:
A. uncertain without more information.
B. more than 0.15.
C.0.15.
D. less than 0.15.
2. All of the following determine the price elasticity of demand except:
A. a change in the price of resources used to produce the good.
B. the existence of close substitutes.
C. the proportion of a person's budget spent on the good.
D. the length of the time period.
3. A student organization finds that when it prices logo emblazoned at $12, the organization sells 200 per day. When the price is reduced to $10, the organization sells 250 per week. Based on this information, use the average-values formula to find the price elasticity of demand for logo emblazoned shirts. Provide the absolute value of the price elasticity of demand.
A. 1.50
B. 0.67
C. 1.22
D. 0.82
4. What does the price elasticity of demand measure?
A.The amount that the demand curve shifts when there is a change in the price of the good.
B.The responsiveness of quantity demanded to a change in the price of a good.
C.The change in quantity demanded when there is a 1 percent change in income.
D. HOW long it takes consumers to react when there is a change in the price of a good.
5. Income elasticity of demand:
A. measures the responsiveness of price to a change in income.
B. measures the responsiveness of quantity demanded to a change in income and refers to the movement along the demand curve.
C. measures the responsiveness of quantity demanded to a change in income and refers to the vertical shift of the demand curve.
D. measures the responsiveness of quantity demanded to a change in income and refers to the horizontal shift of the demand curve
6. Total revenues are maximized:
A. in the inelastic range of the demand curve.
B. on the downward sloping portion of the demand curve.
C. in the elastic range of the demand curve.
D. at the point of unit elasticity on the demand curve
7.We should expect the cross price elasticity of butter and margarine to be:
a. negative since they are complements.
b. positive since they are complements.
c. positive since they are substitutes
d. negative since they are substitutes.
8. When personal income in the country rises, so do alcohol consumption and traffic fatalities. It can be said that:
A. alcohol is a normal good and has a unit price elasticity of demand.
B. alcohol is an inferior good and has a positive income elasticity of demand.
C. alcohol is a normal good and has a positive income elasticity of demand.
D. none of the above.
9. If a firm increases the price of their product in the elastic portion of the demand curve, total revenues will:
A. stay the same.
B. increase.
C. decrease.
D. first increase and then decrease.
10. A firm sells 2 million units of a good when price is $4.00 and 1.8 million units when price is $4.50. B. The price elasticity of demand is:
A. inelastic.
B. unitary elastic.
C. elastic.
D. perfectly inelastic