1. Question
If the price elasticity of demand is equal to 4, a 1% increase in price will cause the quantity demanded to ________ by ________ percent.
decrease; 25
increase; 4
decrease; ¼
decrease; 4
increase; 1/4
Source: Ch 4, Micro Test Bank, #10

2. Answer
If the price elasticity of demand is equal to 4, a 1% increase in price will cause the quantity demanded to ________ by ________ percent.
decrease; 25
increase; 4
decrease; ¼
decrease; 4 (Correct)
increase; 1/4
Source: Ch 4, Micro Test Bank, #10

3. Question
Which of the following statements about the price elasticity of demand is true?
Slope and elasticity measure the same things.
Price elasticity of demand will vary depending on how price and quantity are measured.
It is important to know whether the price elasticity of demand is a positive or negative number.
The slope of a demand curve does not tell us the price elasticity of demand.
Price elasticity is the same everywhere along a demand curve of any shape.
Source: Ch 4, Micro Test Bank, #17

4. Answer
Which of the following statements about the price elasticity of demand is true?
Slope and elasticity measure the same things.
Price elasticity of demand will vary depending on how price and quantity are measured.
It is important to know whether the price elasticity of demand is a positive or negative number.
The slope of a demand curve does not tell us the price elasticity of demand. (Correct)
Price elasticity is the same everywhere along a demand curve of any shape.
Source: Ch 4, Micro Test Bank, #17

5. Question If a product has an inelastic demand, this means that
consumers are relatively insensitive to a change in the price of the product.
producers are relatively sensitive to a change in the quantity demanded.
consumers are relatively sensitive to a change in the price of the product.
producers are relatively insensitive to a change in the quantity demanded.
consumers are relatively insensitive to a change in the quantity demanded.
Source: Ch 4, Micro Test Bank, #22

6. Answer If a product has an inelastic demand, this means that
consumers are relatively insensitive to a change in the price of the product. (Correct)
producers are relatively sensitive to a change in the quantity demanded.
consumers are relatively sensitive to a change in the price of the product.
producers are relatively insensitive to a change in the quantity demanded.
consumers are relatively insensitive to a change in the quantity demanded.
Source: Ch 4, Micro Test Bank, #22

7. Question
Carla buys one soft drink a day regardless of the price. Which of the following statements is correct with respect to Carla?
Price elasticity of demand for soft drinks is infinite.
Price elasticity of demand for soft drinks is zero.
Price elasticity of demand for soft drinks is 1.
Cross-price elasticity of demand for soft drinks is 1.
Price elasticity of demand cannot be calculated with the information given.
Source: Ch 4, Micro Test Bank, #30

8. Answer
Carla buys one soft drink a day regardless of the price. Which of the following statements is correct with respect to Carla?
Price elasticity of demand for soft drinks is infinite.
Price elasticity of demand for soft drinks is zero. (Correct)
Price elasticity of demand for soft drinks is 1.
Cross-price elasticity of demand for soft drinks is 1.
Price elasticity of demand cannot be calculated with the information given.
Source: Ch 4, Micro Test Bank, #30

9. Question When the demand curve is a vertical line, demand is
relatively elastic.
perfectly inelastic.
unit-elastic.
infinitely elastic.
cross-elastic.
Source: Ch 4, Micro Test Bank, #35

10. Answer When the demand curve is a vertical line, demand is
relatively elastic.
perfectly inelastic. (Correct)
unit-elastic.
infinitely elastic.
cross-elastic.
Source: Ch 4, Micro Test Bank, #35

11. Question
Suppose that the price of product G increases from $10 to $20 and, in response, quantity demanded declines from 100 to 80. Using the midpoint formula, what is the price elasticity of demand?
- 0.5
- 3
- 0.67
- 0.33
- 2
Source: Ch 4, Micro Test Bank, #43

12. Answer
Suppose that the price of product G increases from $10 to $20 and, in response, quantity demanded declines from 100 to 80. Using the midpoint formula, what is the price elasticity of demand?
- 0.5
- 3
- 0.67
(Correct)
- 2
Source: Ch 4, Micro Test Bank, #43

13. Question
If a consultant to a Major League Baseball team owner suggests that ticket prices be raised in order to increase revenue, the consultant must believe that the absolute value of the price elasticity of demand for baseball tickets is
equal to infinity.
less than 1.
greater than 1.
equal to 1.
There is not enough information provided to answer this question.
Source: Ch 4, Micro Test Bank, #56

14. Answer
If a consultant to a Major League Baseball team owner suggests that ticket prices be raised in order to increase revenue, the consultant must believe that the absolute value of the price elasticity of demand for baseball tickets is
equal to infinity.
less than 1. (Correct)
greater than 1.
equal to 1.
There is not enough information provided to answer this question.
Source: Ch 4, Micro Test Bank, #56

15. Question
The maximum number of seats at the University of Phoenix Stadium, the site for Super Bowl XLII, is 73,000. At this quantity, the price elasticity of supply for tickets is
very elastic.
perfectly inelastic.
perfectly elastic.
infinite.
73,000.
Source: Ch 4, Micro Test Bank, #61

16. Answer
The maximum number of seats at the University of Phoenix Stadium, the site for Super Bowl XLII, is 73,000. At this quantity, the price elasticity of supply for tickets is
very elastic.
perfectly inelastic. (Correct)
perfectly elastic.
infinite.
73,000.
Source: Ch 4, Micro Test Bank, #61

17. Question
Last year, Keith purchased 20 pounds of beef when his income was $30,000. This year his income is $40,000 and he purchased 40 pounds of beef. Which of the following statements is true?
Keith’s demand for beef is price inelastic.
Beef and income are substitutes.
Keith’s demand for beef is price elastic.
Beef is a normal good.
None of the above.
Source: Ch 4, Micro Test Bank, #71

18. Answer
Last year, Keith purchased 20 pounds of beef when his income was $30,000. This year his income is $40,000 and he purchased 40 pounds of beef. Which of the following statements is true?
Keith’s demand for beef is price inelastic.
Beef and income are substitutes.
Keith’s demand for beef is price elastic.
Beef is a normal good. (Correct)
None of the above.
Source: Ch 4, Micro Test Bank, #71

19. Question For a given shift in demand, the less elastic is supply,
the greater is the shift in demand.
the greater is the change in equilibrium quantity.
the smaller is the shift in demand.
the greater is the change in price.
the smaller is the change in price.
Source: Ch 4, Micro Test Bank, #99

20. Answer For a given shift in demand, the less elastic is supply,
the greater is the shift in demand.
the greater is the change in equilibrium quantity.
the smaller is the shift in demand.
the greater is the change in price. (Correct)
the smaller is the change in price.
Source: Ch 4, Micro Test Bank, #99

21. Question
Suppose that Bob increased his expenditures for comic books as his income increased. This implies that Bob considers comic books as
inferior goods and his income elasticity of demand for comic books is negative.
inferior goods and his income elasticity of demand for comic books is positive.
normal goods and his income elasticity of demand for comic books is negative.
normal goods and his income elasticity of demand for comic books is positive.
Inferior goods and his income elasticity of demand for comic books is zero.

22. Answer
Suppose that Bob increased his expenditures for comic books as his income increased. This implies that Bob considers comic books as
inferior goods and his income elasticity of demand for comic books is negative.
inferior goods and his income elasticity of demand for comic books is positive.
normal goods and his income elasticity of demand for comic books is negative.
normal goods and his income elasticity of demand for comic books is positive. (Correct)
Inferior goods and his income elasticity of demand for comic books is zero.