Multiple Choice Answers

The demand for a good is inelastic. Which of the following would be the most likely explanation for this?

A. The good is narrowly defined.
B. The good is broadly defined.
C. The good is a large portion of one’s total income.
D. The time interval considered is long.
If demand is highly elastic and supply shifts to the right:

A. price will fall significantly; quantity hardly changes at all.
B. price will hardly change at all; quantity will rise significantly.
C. price will rise significantly as will quantity.
D. price and quantity will hardly change at all.
Price elasticity of demand is the:

A. change in the quantity of a good demanded divided by the change in the price of that good.
B. change in the price of a good divided by the change in the quantity of that good demanded.
C. percentage change in price of that good divided by the percentage change in the quantity of that good demanded.
D. percentage change in quantity of a good demanded divided by the percentage change in the price of that good.
If supply is highly elastic and demand shifts to the left:

A. price will fall significantly; quantity hardly changes at all.
B. price will hardly change at all; quantity will fall significantly.
C. price will fall significantly as will quantity.
D. price and quantity will hardly change at all.
if the supply of a product is inelastic, this implies that a given percentage change in price leads to:

A. an equal percentage change in the quantity supplied.
B. a larger percentage change in the quantity supplied.
C. a smaller percentage change in the quantity supplied.
D. no percentage change in the quantity supplied.
Along a downward-sloping straight line demand curve beginning at the price where demand intersects the price axis, as price declines revenue:

A. declines.
B. rises.
C. declines then rises.
D. rises then decline
The Honolulu tourism commission recently proposed a 7% tax on hotel rooms to pay for an outdoor amphitheater. A Purdue University economist estimates that the tax would result in a 4% increase in price and an 8% drop in the quantity of hotel rooms demanded. As a result of the tax, the total spent on hotels will:

A. rise because demand is elastic.
B. decline because demand is elastic.
C. rise because demand is inelastic.
D. decline because demand is inelastic.
For necessities, income elasticity is any value:

A. greater than 0.
B. greater than 1.
C. less than 0.
D. between 0 and 1.
If pizzas and quesadillas are substitutes, and the price of pizzas increases, then we would expect to see:

A. an increase in the demand for quesadillas.
B. a decrease in the demand for quesadillas.
C. an increase in the quantity demanded for quesadillas but no change in demand.
D. a decrease in the quantity demanded for quesadillas but no change in demand.

Elasticity is smallest at which point?

A. A.
B. B.
C. D.
D. C.

Refer to the above graph. Which point has an elasticity greater than one?

A. E
B. D
C. B
D. C