Question : 21) Which of the following illustrates elastic demand? A) A 10% : 1384156

 

21) Which of the following illustrates elastic demand?

A) A 10% increase in price causes a 5% decrease in quantity demanded.

B) A 10% increase in price causes a 20% decrease in quantity demanded.

C) a price elasticity of 0.8

D) a price elasticity of 1.0

E) A 10% increase in price causes a 10% reduction in quantity demanded.

22) If per capita income increases by 10% and household expenditure on fur coats increases by 15%, one can conclude that the price elasticity of demand for fur coats is

A) elastic.

B) inelastic.

C) unity.

D) positive.

E) not determinable from the information given.

23) Refer to Figure 4-1, which shows two demand curves, one linear and the other a rectangular hyperbola. In diagram 1, the price elasticity of demand

A) at point A is equal to that at point C.

B) at point A is less than at point C.

C) at point A is greater than at point C.

D) is equal at points A, B, and C.

E) at point A is equal to that at point B.

24) Refer to Figure 4-1, which shows two demand curves, one linear and the other a rectangular hyperbola. The price elasticity of demand is equal to one along the entire demand curve in

A) diagram 1 only.

B) diagram 2 only.

C) both diagrams.

D) neither diagram.

25) A perfectly horizontal demand curve shows that the price elasticity of demand is

A) zero.

B) unity.

C) less than one.

D) infinite.

E) not defined.

26) A vertical demand curve shows that the price elasticity of demand is

A) zero.

B) unity.

C) less than one.

D) infinity.

E) not defined.

27) The price elasticity of demand for a product tends to be greater the

A) lower its price.

B) more broadly the product is defined.

C) fewer close substitutes for it there are.

D) more close substitutes for it there are.

E) shorter the time span being considered.

28) Which of the following statements would you expect to be true about the demand elasticities for cornflakes and food?

A) Compared with food, cornflakes have a lower price elasticity of demand because it is specifically defined.

B) Because cornflakes is food, but not all food is cornflakes, cornflakes would have a lower price elasticity of demand.

C) Food has a higher price elasticity of demand because it is a necessity.

D) Because cornflakes is food, cornflakes would have the same price elasticity of demand as food.

E) Food has a lower price elasticity of demand than cornflakes because it is more broadly defined.

29) With a downward-sloping straight-line demand curve, price elasticity of demand is

A) rising continuously with price increases.

B) decreasing continuously with price increases.

C) increasing to the midpoint of the curve and then decreasing.

D) constant everywhere on it.

E) indeterminate.

30) Which of the following statements about price elasticity of demand is true?

A) It is greater than one if the percentage increase in the commodity’s price is greater than the percentage decline in quantity demanded.

B) It is very small when good substitutes are readily available for the commodity.

C) It usually increases over time.

D) It is a positive number because price and quantity demanded move in the same direction.

E) It is higher for an entire group of related products than it is for a particular product in that group.

 

 

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