If a 5 percent decrease in the price of a good produces a 5 percent increase in the quantity demanded, the price elasticity of demand is:
a. perfectly elastic.
b. perfectly inelastic.
c. elastic.
d. inelastic.
e. unitary elastic.
QUESTION 2Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is 3 per bushel and 1,500 million bushels when the price is 1 per bushel. The price elasticity of demand in this range of the demand curve is:
a. elastic. b. inelastic.
c. unitary elastic. d. infinitely elastic.
QUESTION 3Suppose the Good Food supermarket increases the price of a pound of bananas from .75 to 1.25 and finds that the quantity of bananas it sells per month drops from 1,500 to 1,000 . The price elasticity of demand coefficient for bananas in this price range is:
a. 0.80 b. 3.00.
c. 2.00 d. 0.50.
QUESTION 4Suppose the quantity demanded of steak is 200 million pounds per year when the price is 6 per pound and 400 million pounds per year when the price is 2 per pound. The price elasticity of demand for steak over this range is:
a. elastic.
b. inelastic.
c. unitary elastic.
d. perfectly elastic.
e. perfectly inelastic.
QUESTION 5If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, the price elasticity of demand over this range of the demand curve is:
a. price elastic.
b. price inelastic.
c. perfectly inelastic.
d. unitary elastic.
QUESTION 6Governments can use price elasticity of demand to estimate how changes in excise tax rates will affect:
a. income.
b. prices.
c. tax revenues.
d. government spending.
e. profits.
QUESTION 7The percentage change in the quantity demanded of film divided by the percentage change in the price of cameras indicates:
a. the price elasticity of demand for film.
b. the price elasticity of demand for cameras.
c. the price elasticity of supply for film.
d. the price elasticity of supply for cameras.
e. nothing, because the two goods fall into the broadly defined category of photographic equipment.
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