416 417 418 419 420 The price elasticity of demand measures the responsiveness of the change in the quantity demanded to a change in the price True Answer Correct price to a change in the quantity demanded Incorrect slope of the demand curve to a change in the price Incorrect slope of the demand curve to a change in the quantity demanded Incorrect When the price goes down the quantity demanded goes up This price elasticity measures how much the price goes down Incorrect much the equilibrium price goes up Incorrect responsive the price change is in relation to an income change Incorrect responsive the quantity change is in relation to the price change True Answer Correct If the price of a good increases by 20 and the quantity demanded changes by 15 then the price elasticity of demand is equal to 0 75 True Answer Correct approximately 0 33 Incorrect approximately 1 33 Incorrect 1 Incorrect The price elasticity of demand is computed as the percentage change in the quantity demanded divided by the percentage change in the quantity supplied Incorrect price divided by the percentage change in the quantity demanded Incorrect quantity demanded divided by the percentage change in income Incorrect quantity demanded divided by the percentage change in the price True Answer Correct The price of gasoline rises 5 and the quantity of gasoline purchased falls 1 The price elasticity of demand is equal to 0 2 inelastic True Answer Correct and demand is described as 421 422 423 5 inelastic Incorrect 0 2 elastic Incorrect 5 elastic Incorrect A local restaurant has estimated that the price elasticity of demand for meals is equal to 2 If the restaurant increases menu prices by 5 they can expect the number of customers to decrease by and total revenue to 10 increase Incorrect 5 stay constant Incorrect 10 fall True Answer Correct 2 5 fall Incorrect The ratio of the percentage change in the quantity demanded to the percentage change in price is the price elasticity of demand True Answer Correct quantity elasticity of demand Incorrect income elasticity of demand Incorrect cross price elasticity of demand Incorrect Which of the following best describes the price elasticity of demand The price elasticity of demand measures the responsiveness of the change in the quantity demanded to a change in the price True Answer Correct The price elasticity of demand measures the change in the price versus a change in the quantity demanded Incorrect The price elasticity of demand measures the responsiveness of the change in the slope of the demand curve to a change in the price Incorrect The price elasticity of demand measures the change in the slope of the demand curve versus a change in the quantity demanded Incorrect 424 The price elasticity of demand is measured by dividing the percentage change in the price by the percentage change in the quantity demanded Incorrect dividing the percentage change in the quantity demanded by the percentage change in the price True Answer Correct subtracting the percentage change in the price from the 425 426 427 percentage change in the quantity demanded Incorrect adding the percentage change in the price to the percentage change in the quantity demanded Incorrect When actually calculated for a normal demand curve the price elasticity of demand will be always positive Incorrect always greater than 1 Incorrect usually equal to 1 Incorrect always negative True Answer Correct The price elasticity of demand can be found by examining only the slope of the demand curve Incorrect measuring absolute changes in the price and the quantity demanded Incorrect comparing the percentage change in the quantity demanded to the percentage change in the price True Answer Correct knowing that when the price changes the quantity demanded goes in the opposite direction Incorrect If the price of a good increases by 15 and the quantity demanded changes by 20 then the price elasticity of demand is equal to 0 75 Incorrect approximately 0 33 Incorrect approximately 1 33 True Answer Correct 1 Incorrect 428 The price elasticity of demand measures the responsiveness of the quantity demanded to a change in the price True Answer Correct responsiveness of the price to a change in the quantity demanded Incorrect extent to which prices are flexible and respond to market forces Incorrect responsiveness of demand when the price is held constant and demand increases or decreases Incorrect 429 430 431 432 433 Suppose the price of gasoline increases 10 and quantity of gasoline demanded in Orlando drops 5 per day Demand for gasoline in Orlando is price elastic Incorrect price inelastic True Answer Correct price unit elastic Incorrect perfectly price inelastic Incorrect If the estimated price elasticity of demand for foreign travel is 4 then a 20 decrease in the price of foreign travel will increase the quantity demanded by 80 True Answer Correct the demand for foreign travel is inelastic Incorrect a 10 increase in the price of foreign travel will increase the quantity demanded by 40 Incorrect a 20 increase in the price of foreign travel will increase the quantity demanded by 80 Incorrect Egg producers know that the elasticity of demand for eggs is 0 1 If they want to increase sales by 5 they will have to lower price by 0 1 Incorrect 1 Incorrect 5 Incorrect 50 True Answer Correct Gas prices recently increased by 25 In response purchases of gasoline decreased by 5 Based on this data the price elasticity of demand for gas is 5 Incorrect 2 Incorrect 0 2 True Answer Correct 0 5 Incorrect The only producer of chocolate bunnies in the world Choco s Bunny Company recently expanded its production capacity from 1 000 to 2 000 bunnies per day If the price elasticity of demand for bunnies is 3 33 by how much will the company need to reduce its price to sell the additional 1 000 bunnies using the midpoint method 2 5 Incorrect 25 Incorrect 125 Incorrect 20 True Answer Correct The Cozy Chair Company believes it can sell 200 chairs at 200 per chair or 300 chairs at 150 per chair Using the midpoint formula what do they think is the price elasticity of demand 2 5 Incorrect 1 4 True Answer Correct 0 7 Incorrect 0 5 Incorrect The publisher of an economics textbook finds that when the book s price is lowered from 70 to 60 sales rise from 10 000 to 15 000 Using the midpoint method the price elasticity of demand is 500 Incorrect 50 Incorrect 3 5 Incorrect 2 6 True Answer Correct 434 435 436 Reference Ref 6 1 Table Market for Pizza Look at the
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