Vous êtes sur la page 1sur 6

Quiz 6 Chapter 20

Name: __________________________ Date: _____________ 1. The price elasticity of demand is defined as the: A) Percentage change in quantity demanded times the percentage change in price. B) Unit change in price divided by the unit change in quantity demanded. C) Percentage change in quantity demanded divided by the percentage change in price. D) Unit change in quantity demanded times the unit change in price. 2. Assume the price elasticity of demand for U.S. Frisbee Co. frisbees is 0.5. If the company increases the price of each frisbee from \$6 to \$8, the number of frisbees sold will: A) Decrease by 14.3 percent. B) Decrease by 33.3 percent. C) Increase by 20.0 percent. D) Increase by 7.0 percent. 3. The price elasticity of demand is calculated using percentage changes in order to: A) Avoid mistaking elasticity with slope. B) Make elasticity a percentage figure. C) Avoid problems associated with units of measurement. D) Find a constant elasticity along each demand curve. 4. Assume the price elasticity of demand has an absolute value of 4 for a particular good. This means that quantity demanded will decrease by: A) 4 percent for each 1 percent increase in price, ceteris paribus. B) 1 unit for each \$4 increase in price, ceteris paribus. C) 1 percent for each 4 percent increase in price, ceteris paribus. D) 4 units for each \$1 increase in price, ceteris paribus. 5. When the percentage change in quantity demanded is less than the percentage change in price, ceteris paribus: A) Demand is elastic. B) Demand is inelastic. C) Demand is unitary elastic. D) Elasticity is impossible to calculate.

Page 1

6. A demand curve is described as perfectly elastic if: A) The same quantity is purchased regardless of price. B) The same price is charged regardless of quantity sold. C) Only price can change. D) It is vertical. 7. When the percentage change in quantity demanded is greater than the percentage change in price, ceteris paribus: A) Demand is unitary elastic. B) Demand is inelastic. C) Demand is elastic. D) Elasticity is impossible to calculate. 8. Which of the following influences the price elasticity of demand? A) Availability of substitutes. B) Price relative to budget. C) Length of time. D) All of the above. 9. Which of the following would be most likely to have a price-elasticity coefficient greater than 1? A) Cigarettes. B) Coffee. C) An addictive drug. D) Restaurant meals. 10. Which of the following would be most likely to have a price-elasticity coefficient less than 1? A) An addictive drug. B) Airline travel. C) Restaurant meals. D) New cars. 11. Which of the following causes demand to be more elastic with respect to price? A) Shorter periods of time to adjust to a change in price. B) A steeper demand curve for a given price and quantity. C) Fewer substitutes. D) A high ratio of price to income.

Page 2

12. If the price elasticity of demand is 2.0, and a firm raises its price by 10 percent, the quantity sold by the firm will: A) Increase by 10 percent. B) Decrease by 10 percent. C) Decrease by 20 percent. D) Increase by 20 percent. 13. When demand is price inelastic, ceteris paribus: A) An increase in price leads to lower total revenue. B) An increase in total revenue means quantity rises. C) An increase in total revenue indicates a reduction in price. D) An increase in price leads to greater total revenue. 14. Suppose the income elasticity of demand for U.S. automobiles is 2.0. If the level of income decreases by 1 percent, the number of U.S. automobiles sold will, ceteris paribus: A) Rise 0.5 percent. B) Rise 2.0 percent. C) Fall 0.5 percent. D) Fall 2.0 percent. 15. Other things being equal, if income increases and as a result, the demand for good X increases, then good X is: A) An inferior good. B) A luxury good. C) A substitute good. D) A normal good. 16. Other things being equal, if the price of good X increases and as a result, the demand for good Y increases: A) Goods X and Y are inferior goods. B) Goods X and Y are normal goods. C) Goods X and Y are complementary goods. D) Goods X and Y are substitute goods.

Page 3