1. Which term do economists use to represent responsiveness of one variable to a change in another variable?

a. Sustainability b. Remarkability c. Susceptibility d. Elasticity

2. The more time consumers have to react to a price change, the greater will be their price elasticity of demand.

a. True b. False

3. The income elasticity of demand for an economically inferior good is positive because, as income rises, demand for the good rises.

a. True b. False

4. If household income increases 20% and household demand for potatoes declines 10%, the evidence shows that potatoes are a(n) _____.

a. economically normal good b. economically inferior good c. luxury good d. price-elastic good

5. If household incomes decline during an economic downturn, and if demand for premium brands of orange juice fall as a result, these brands are economically normal goods.

a. True b. False

6. The elasticity of a demand between any two points on a demand curve is measured as _____.

a. % change in quantity demanded divided by % change in price b. the slope of the demand curve c. 1/slope of the demand curve d. change in price - change in quantity demanded

7. Elasticity in economics refers to a ratio of percentage changes in two related variables.

a. True b. False

8. If, other things being equal, the % change in P is 20% and the associated % change in Qs is 10%, what is the price elasticity of supply?

a. -2.0 b. -0.5 c. 0.5 d. 2.0

9. If price elasticity of demand equals 1.0, then for that range of demand a 10% price increase will cause _____.

a. a 1% increase in total revenue b. a 10% increase in total revenue c. no change in total revenue d. a 10% decrease in total revenue

10. The price elasticity of demand equals the percentage change in buyers' quantity demanded divided by the percentage change in quantity supplied.

a. True b. False

11. If the price elasticity of demand equals 1.0, then a price change will cause no change in total revenue.

a. True b. False

12. (Qd is quantity demanded.) If the price elasticity of demand is inelastic, then a 10% decrease in price will cause _____.

a. more than a 10% increase in Qd b. exactly a 10% increase in Qd c. less than a 10% increase in Qd d. no increase in Qd

13. A vertical demand curve is said to be _____.

a. perfectly elastic b. unitary elastic c. constant in elasticity d. perfectly inelastic

14. If the price elasticity of demand is inelastic, then a 10% increase in price will cause more than a 10% increase in quantity demanded.

a. True b. False

15. [P is price and Qd is quantity demanded.] Which of these measures the elasticity of a demand between any two points on a demand curve?

a. (Qd2 - Qd1) / (P2 - P1) b. (Qd2 - Qd1) * (P2 - P1) c. (Qd2 + Qd1) / (P2 + P1) d. (Qd2 - Qd1) / (Qd2 + Qd1) divided by (P2 - P1) / (P2 + P1)

16. A horizontal demand curve is said to be perfectly inelastic.

a. True b. False

17. If price elasticity of demand equals 1.5, then we call this _____.

a. perfectly inelastic demand b. inelastic demand c. unit elastic demand d. elastic demand

18. (Assume Qd is quantity demanded, and P is price.) The best way to calculate a price elasticity of demand is: (Qd2 - Qd1) / (P2 - P1).

a. True b. False

19. If, other things being equal, the % change in P is -5% and the associated % change in Qd is 10%, what is the price elasticity of demand? Assume the minus sign matters.

a. -2.0 b. -0.5 c. 0.5 d. 2.0

20. Elastic demand means any value of elasticity less than 1.

a. True b. False