Multiple Choice Questions:
1. Price elasticity of demand is said to be greater
a. The shorter the period of time consumers have to adjust to price changes.
b. The longer the period of time consumers have to adjust to price changes.
c. When there are fewer available substitutes.
d. When the elasticity of supply is greater.
2. If recent sharp increases in the price of insulin have had only a small effect on the amount of insulin purchased, then the demand for insulin is
a. Elastic.
b. Inelastic.
c. Unit elastic.
d. Perfectly elastic.
3. The price-elasticity-of-demand coefficient for herbal tea is estimated to be equal to 0.5. It is expected, therefore, that a 10 percent decrease in price would lead to _____________ in the quantity of herbal tea demanded.
a. A 5 percent decrease
b. A 5 percent increase
c. A 10 percent decrease
d. A 10 percent increase
e. A 0.5 percent increase
4. The long-run demand curve for gasoline is likely to be
a. More elastic than the short-run demand curve for gasoline.
b. More inelastic than the short-run demand curve for gasoline.
c. The same as the short-run demand curve for gasoline.
d. More inelastic than the short-run supply of gasoline.
5. Demand curves for goods tend to become more inelastic
a. When more good substitutes for the good are available.
b. When the good makes up a larger portion of a person’s income.
c. When people have less time to adapt to a given price change.
d. When any of the above is true.
e. In none of the above situations.
6. When the local symphony recently raised the ticket price for its summer concerts in the park, the symphony was surprised to see that its total revenue had actually decreased. The reason was that the elasticity of demand for tickets was
a. Unit elastic.
b. Unit inelastic.
c. Inelastic.
d. Elastic.
7. For a given increase in price, the greater the elasticity of supply, the greater the resulting
a. Decrease in quantity supplied.
b. Decrease in supply.
c. Increase in quantity supplied.
d. Increase in supply.
8. If the demand for gasoline is highly inelastic and the supply is highly elastic, and then a tax is imposed on gasoline, it will be paid
a. Largely by the sellers of gasoline.
b. Largely by the buyers of gasoline.
c. Equally by the sellers and buyers of gasoline.
d. By the government.