Chapter 5
Elasticity and Its Applications
Test A
. In general, elasticity is
a. a measure of the competitive nature of a market.
b. the friction that develops between buyer and ller in a market.
c. a measure of how much government intervention is prevalent in a market.
d. a measure of how much buyers and llers respond to changes in market conditions.
TYPE: M KEY1: D OBJECTIVE: 1 RANDOM: Y
. Demand is said to be elastic if
a. the price of the good responds substantially to changes in demand.
b. the quantity demanded responds substantially to changes in the price of the good.
c. buyers don’t respond much to changes in the price of the good.
d. demand shifts substantially when the price of the good changes.
TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y
. Demand for a good would tend to be more elastic, the
a. longer the period of time considered.
b. greater the availability of complements.
c. broader the definition of the market.
d. fewer substitutes there are.
TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 2 RANDOM: Y
. Economists compute the price elasticity of demand as
a. percentage change in the price divided by the percentage change in quantity demanded.
b. change in quantity demanded divided by the change in the price.
c. percentage change in the quantity demanded divided by the percentage change in price.
d. percentage change in the quantity demanded divided by the percentage change in income.
TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 2 RANDOM: Y
. If there are very few, if any, good substitutes for good A, then
a. supply of good A would tend to be price elastic.
b. demand for good A would tend to be price inelastic.
c. demand for good A would tend to be price elastic.
d. demand for good A would tend to be income elastic.
TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 2 RANDOM: Y
.
Suppo the price of product X is reduced from $1.45 to $1.25 and, as a result, the quantity of X demanded increas from 2,000 to 2,200. Using the midpoint method, the price elasticity of demand for X in the given price range is
a. 0.64.
b. 1.00.
c. 1.55.
d. 2.00.
TYPE: M KEY1: G SECTION: 1 OBJECTIVE: 2 RANDOM: Y
. The main reason for using the midpoint method is that it
a. us fewer numbers.
b. rounds prices to the nearest dollar.
c. gives the same answer regardless of the direction of change.
d. rounds quantities to the nearest whole unit.
TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 2 RANDOM: Y
. If the demand curve is linear and downward sloping, which of the following would NOT be correct?
a. Elasticity will change with a movement down the curve.
b. The upper part of the demand curve is more elastic than the lower part.
c. The lower part of the demand curve would be less elastic than the upper part.
d. Elasticity and slope would both remain constant along the curve.
TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 2 RANDOM: Y
. Demand is elastic if elasticity is
a. equal to 0.
b. equal to 1.
c. less than 1.
d. greater than 1.
TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 2 RANDOM: Y
. In the graph shown, the ction of the demand curve labeled A reprents the
a. elastic ction of the demand curve.
b. inelastic ction of the demand curve.
c. unit elastic ction of the demand curve.
d. perfectly elastic ction of the demand curve.
TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 2 RANDOM: Y
.
On the graph shown, the elasticity of demand from point B to point C, using the midpoint method would be
a. 1.3.
b. 1.0.
c. 0.75.
d. 0.50.
TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 2 RANDOM: Y
. A perfectly elastic demand implies that
a. buyers will not respond to any change in price.
b. price and quantity demanded respond proportionally.(成比例地)
c. price will ri by an infinite amount when there is a change in quantity demanded.
d. any ri in price above that reprented by the demand curve will result in no output demanded.
demanded.
TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 2 RANDOM: Y
. On a downward-sloping, linear demand curve, total revenue would be at a maximum at the
a. upper end of the demand curve.
b. midpoint of the demand curve.(画图)
c. lower end of the demand curve.
d. It is impossible to tell without knowing the price and quantity demanded.