Elasticity

Elasticity

1)

The price elasticity of demand reflects the responsiveness of:

1)

_______
A)

firms to changes in demand.
B)

demand to a change in price of a substitute good.
C)

demand to a change in price.
D)

quantity demanded to a change in price.

2)

The responsiveness of quantity demanded to a change in price is known as the:

2)

_______
A)

price elasticity of supply.
B)

price elasticity of demand.
C)

cross elasticity of demand.
D)

income elasticity of demand.

3)

A good synonym for elasticity would be:

3)

_______
A)

change.
B)

demand.
C)

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,responsiveness.
D)

stickiness.

4)

The price elasticity of demand is calculated by:

4)

_______
A)

the change in price divided by the change in quantity demanded.
B)

the change in quantity demanded divided by the change in price.
C)

the percentage change in price divided by the percentage change in quantity demanded.
D)

the percentage change in quantity demanded divided by the percentage change in price.




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, 5)

The ratio of the percentage change in quantity demanded to the percentage change in
price is known as the:

5)

_______
A)

demand-side shift factor.
B)

income elasticity of demand.
C)

price elasticity of demand.
D)

cross elasticity of demand.

6)

If the price elasticity of demand is 0.5, this means that a ________ increase in price causes a
________ decrease in quantity demanded.

6)

_______
A)

20%; 100%
B)

20%; 10%
C)

20%; 1%
D)

5%; 1%

7)

Suppose that you see the same number of movies every month no matter what happens to
the price of movies. This suggests that your demand for movies is:

7)

_______
A)

elastic.
B)

perfectly inelastic.
C)

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