Question : 5.1   The Price Elasticity of Demand 1) The price elasticity of : 1241494

5.1   The Price Elasticity of Demand

1) The price elasticity of demand is a measure of

A) the equilibrium price of a product.

B) buyers’ responsiveness to changes in the price of a product.

C) the amount of a product purchased when income increases.

D) whether a product is a substitute or a complement.

E) how much a change in demand affects the equilibrium price.

2) The price elasticity of demand measures which of the following?

A) the slope of the demand curve

B) the rate at which demand changes when price changes

C) how responsive the quantity demanded is to changes in price

D) the percentage-slope of the demand curve

E) None of these correctly defines what price elasticity of demand measures.

3) The price elasticity of demand measures the extent to which the quantity demanded changes when

A) the price of the good changes.

B) the price of a related good changes.

C) the expected future price of a good changes.

D) consumer preferences change.

E) both the demand and supply of the good change.

4) The price elasticity of demand measures the ________ that results from a ________.

A) change in quantity demanded; change in price

B) change in price; change in the quantity demanded

C) percentage change in price; percentage change in the quantity demanded

D) percentage change in the quantity demanded; percentage change in price

E) percentage change in the quantity demanded; change in price

5) The elasticity of demand is used to

A) determine if consumers will or will not buy a product.

B) measure how responsive consumers are to a change in price.

C) determine in what direction the demand curve shifts if income changes.

D) find the market equilibrium.

E) determine if a change in price results in a shortage or a surplus.

6) To determine the price elasticity of demand, we

A) need information on consumers’ incomes.

B) need to know how much is available.

C) compare the percentage change in the quantity demanded to the percentage change in the price.

D) compare the change in the quantity to the change in price.

E) divide the quantity by the price.

7) If the price of a good rises, then moving along a demand curve the percentage change in the quantity demanded will be

A) positive.

B) negative.

C) zero.

D) either positive, negative, or zero depending on how the demand curve shifted.

E) undefined.

8) If we ignore the negative or positive sign, the midpoint method of calculating a percentage change in price between two points on a demand curve results in

A) a smaller percentage change if the price rises than if it falls.

B) the same percentage, regardless of whether the price increases or decreases.

C) the price elasticity of demand.

D) the price elasticity of supply.

E) a higher percentage change if the price rises than if it falls.

9) Suppose the price of a box of cereal rises from $4 to $6. Using the midpoint method, what is the percentage change in price?

A) 50 percent

B) 40 percent

C) 33 percent

D) 67 percent

E) None of the above answers is correct.

10) Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month. Using the midpoint formula, the ________ percent change in price lead to a ________ percent change in the quantity demanded.

A) 12.5; 10.5

B) 13.3; 10.0

C) 11.8; 11.1

D) 8.0; 9.5

E) None of the above answers is correct.