Eco 102 H Review (Chapter 5: Elasticity And Its Application)
34 Questions
| Total Attempts: 265
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Choose the BEST answer. Read the explanation if there is.
Questions and Answers
- 1.Elasticity measured the magnitude of how much buyers and sellers respond to changes in market conditions.
- A.
True
- B.
False
- 2.The price elasticity of demand measures how willing consumers are to buy less of the good as its price decreases.
- A.
True
- B.
False
- 3.Goods with close substitutes tend to have more elastic demand.
- A.
True
- B.
False
- 4.Neccesities tend to have elastic demands, whereas luxuries have inelastic demands.
- A.
True
- B.
False
- 5.Whether a good is a necessity depends not on the intrinsic properties of the good.
- A.
True
- B.
False
- 6.Narrowly defined markets tend to have more elastic demand than broadly defined markets.
- A.
True
- B.
False
- 7.Goods tend to have a more inelastic demand over longer time horizon.
- A.
True
- B.
False
- 8.In Mankiw's book, a larger price elasticity implies a lesser responsiveness of quantity demanded to price.
- A.
True
- B.
False
- 9.Using the midpoint method, what is the demand elasticity of a product if its price rose from $4 to $6 and its quantity decreased from 120 to 80?
- A.
0.25
- B.
2.5
- C.
-1
- D.
1
- 10.In Mankiw's book, what elasticity represents is more important than how it is calculated.
- A.
True
- B.
False
- 11.Demand is considered elastic when the elasticity is less than 1, and inelastic if the elasticity is greater than 1.
- A.
True
- B.
False
- 12.If the elasticity is exactly 1, the quantity moves the same amount proportionately as the price, and demand is said to have unit elasticity.
- A.
True
- B.
False
- 13.The price elasticity is closely related to the demand slope.
- A.
True
- B.
False
- 14.The flatter the demand curve that passes through a given point, the greater the price elasticity of the demand and vice versa.
- A.
True
- B.
False
- 15.Profit is the amount paid by buyers and received by sellers of the good.
- A.
True
- B.
False
- 16.How total revenue changes as one moves along the demand curve does not depend on the price elasticity of demand.
- A.
True
- B.
False
- 17.An increase in price in a good with an elastic demand decreases total revenue, while it increase if the good has an inelastic demand.
- A.
True
- B.
False
- 18.Which is not part of the general rules for demand elasticity?
- A.
When demand is inelastic, price and total revenue moves in the same direction.
- B.
When demand is elastic, price and total revenue moves in opposite directions.
- C.
If demand is unit elastic, total revenue remains constant when the price changes.
- D.
If demand is unit elastic, total revenue changes from one point to another in the demand curve.
- 19.Even though the slope of a linear demand curve is constant, the elasticity is not.
- A.
True
- B.
False
- 20.In a linear demand curve, the demand curve is elastic at points with low price and high quantity; and the demand curve is inelastic at points with a high price and low quantity.
- A.
True
- B.
False
- 21.Normal goods have positive income elasticities, while inferior goods have negative income elasticties.
- A.
True
- B.
False
- 22.Necessities tend to have small income elasticities.
- A.
True
- B.
False
- 23.Luxuries tend to have small income elasticities.
- A.
True
- B.
False
- 24.The cross-price elasticity of substitutes is negative while the cross-price elasticity of complements is positive.
- A.
True
- B.
False
- 25.The law of supply states that higher prices decrease the quantity supplied.
- A.
True
- B.
False
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