Question : 11) If the price of steel increases drastically, the quantity : 1387530

11) If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because

A) buyers of steel are more sensitive to a price change if they have more time to adjust to the price change.

B) buyers of steel are less sensitive to a price change if they have more time to adjust to the price change

C) sales revenue in the building industry will fall sharply.

D) profits will fall by a greater amount in the long run than in the short run.

12) With the increased usage of cell phone services, what has happened to the price elasticity of demand for land-line telephone services?

A) It has become more price inelastic.

B) It has become more price elastic.

C) It has become more income elastic.

D) The absolute value of the price elasticity coefficient has probably gone down.

13) Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

A) A wide variety of substitutes are available for the good.

B) The time period under consideration is short.

C) The good is a necessity.

D) The expenditure on the good is small relative to one’s budget.

14) If the market for a product is broadly defined, then

A) the good has many complements.

B) there are few substitutes for the product and the demand for the product is relatively inelastic.

C) there are many substitutes for the product and the demand for the product is relatively elastic.

D) the expenditure on the good is likely to make up a large share of one’s budget.

15) Rank these three items in terms of the elasticity of the demand for them at any given price, from most elastic to least elastic: hot beverages, coffee and Peets’ Coffee.

A) hot beverages, coffee, Peets’ Coffee

B) Peets’ Coffee, coffee, hot beverages

C) coffee, Peets’ Coffee, hot beverages

D) coffee, hot beverages, Peets’ Coffee

16) The larger the share of a good in a consumer’s budget, holding everything else constant, the

A) more price elastic is a consumer’s demand.

B) more vertical is a consumer’s demand curve.

C) more price inelastic is a consumer’s demand.

D) more unit-elastic is a consumer’s demand.

17) The most important determinant of the price elasticity of demand for a good is

A) the definition of the market for a good.

B) the availability of substitutes for the good.

C) the share of the good in the consumer’s budget.

D) whether the good is a necessity or a luxury.

18) Which of the following statements is true?

A) In general, if a product has few substitutes it will have an elastic demand.

B) The more time that passes, the more inelastic the demand for a product becomes.

C) The demand curve for a necessity is more elastic than the demand curve for a luxury.

D) The more narrowly we define a market, the more elastic the demand for a product will be.

19) Which of the following is not a determinant of a good’s price elasticity of demand?

A) the slope of the demand curve

B) the share of the good in the consumer’s total budget

C) whether the good is a luxury or a necessity

D) the passage of time

20) If the absolute value of the price elasticity of demand for DVD movies is 0.8, then the elasticity of demand for the DVD for the movie The Hangover should be

A) less than 0.8 in absolute value.

B) greater than 0.8 in absolute value.

C) equal to 1 in absolute value.

D) equal to zero because the DVD of this movie has been out for several years.