Econ

CHAPTER 20

Elasticity of Demand and Supply

Topic Question numbers

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1. Price elasticity of demand 1-39

2. Total revenue test 40-75

3. Determinants of price elasticity 76-93

4. Elasticity of supply 94-125

5. Applications of price elasticity 126-144

6. Cross and income elasticity 145-167

Consider This 168-169

Last Word 170-172

True-False 173-192

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Multiple Choice Questions

Price elasticity of demand

Type: D Topic: 1 E: 356 MI: 112

1. The price elasticity of demand coefficient measures:

A) buyer responsiveness to price changes.

B) the extent to which a demand curve shifts as incomes change.

C) the slope of the demand curve.

D) how far business executives can stretch their fixed costs.

Answer: A

Type: E Topic: 1 E: 356 MI: 112

2. The basic formula for the price elasticity of demand coefficient is:

A) absolute decline in quantity demanded/absolute increase in price.

B) percentage change in quantity demanded/percentage change in price.

C) absolute decline in price/absolute increase in quantity demanded.

D) percentage change in price/percentage change in quantity demanded.

Answer: B

Type: D Topic: 1 E: 356 MI: 112

3. The demand for a product is inelastic with respect to price if:

A) consumers are largely unresponsive to a per unit price change.

B) the elasticity coefficient is greater than 1.

C) a drop in price is accompanied by a decrease in the quantity demanded.

D) a drop in price is accompanied by an increase in the quantity demanded.

Answer: A

Type: A Topic: 1 E: 357 MI: 113

4. If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will:

A) increase the quantity...