Final

Exam Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The price elasticity of demand measures the responsiveness of A) equilibrium changes B) demand to supply changes. C) the price to changes in quantity demanded. D) supply to demand changes. E) quantity demanded to changes in the price. 2) The formula for the own-price elasticity of demand for a commodity can be written as which of the following? change in price A) change in quantity demanded B) C) D) E) change in quantity demanded change in price percentage change in quantity demanded percentage change in price percentage change in one price percentage change in the other price percentage change in price percentage change in quantity demanded 3) 1)

2)

3) If the price elasticity of demand is 1.4, a 10 percent increase in the price of the good results in A) a 14 percent increase in the quantity demanded. B) a 1.4 percent increase in the quantity demanded. C) a 1.4 percent decrease in the quantity demanded. D) a 14 percent decrease in the quantity demanded. E) There is not enough information to answer this question. 4) A vertical demand curve shows that the own-price elasticity of demand is A) less than one. B) infinity. C) not defined. D) unity. E) zero.

4)

1

Demand Schedule for Ski Tickets Quantity Demanded (no. of tickets) 0 100 200 300 400 500 600 700 800 900 1000 1100 1200

Price ($) 120 110 100 90 80 70 60 50 40 30 20 10 0 TABLE 4-2

5) Refer to Table 4-2. Using the data provided to plot the demand curve for ski tickets results in a ________ demand curve. Price elasticity along this demand curve is therefore ________ as price is falling. A) horizontal; constant at a value of 8 B) downward sloping and linear; continuously decreasing C) downward sloping and linear; continuously increasing D) vertical; constant at a value of 0 E) rectangular hyperbola; constant at a value of 1

5)

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