1. The basic structure of every elasticity measure is

Select one:

a. the percentage change in quantity demanded that results from a ten-percent change in price.

b. the percentage change in price that results from a one-percent change in quantity demanded.

c. the percentage change in quantity demanded that results from a one-percent change in (price/income/price of related good).

2 A research article includes the line "While a relatively wide range of estimates has been produced for the price elasticity of demand for cigarettes, most of the estimates from the USA and other high income countries tend to fall in the relatively narrow range from 0.25 to 0.50."

This means that if the price of cigarettes were to decrease 10%, the quantity of cigarettes demanded

would

Select one:

a. decrease by 2.5% to 5.0%.

b. increase by 0.25% to 0.50%.

c. increase by 2.5% to 5.0%.

3 The same research article includes the line " the overall price elasticity of teen smoking was 1.44. This was more than three times the estimated elasticity of 0.42 obtained from the study of adults."

This implies that

Select one:

a. teenagers will purchase much fewer cigarettes if prices rise than adults, who will only reduce their purchases a minor amount.

b. teenagers are willing to pay more than three times as much for cigarettes as adults.

c. teenage cigarette demand is inelastic, while adult cigarette demand is elastic.

4 The point elasticity for the demand function Q= 100 -3.5 P at the ($10, 65) point is

Select one:

A. 100 3.5(10) = 65

B. 3.5 X $10/65 = 0.538

C. 3.5 X 65/$10 = 22.75

D. $10X $10/65 = 1.538

5 You overhear an economist saying that the demand for magnesium groove helmets is inelastic.

This means that a given price change will induce a large quantity demand response.

Select one:

True

False

6 At its current price, demand for magnesium groove helmets is inelastic.

If its price were to decrease, total revenue would be expected to rise.

Select one:

True

False

7 Which product would tend to have the most elastic demand?

Select one:

a. A penthouse apartment across the street from Central Park in New York City.

b. An Almond Joy (coconut, almonds, and chocolate) candy bar.

c. A refrigerator that is needed after your old one unexpectedly stops working.

d. A typical three-bedroom, two-bathroom home in the suburbs.