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1
The price elasticity of demand is defined as the:
A)change in quantity demanded divided by the change in price.
B)percentage change in quantity demanded divided by percentage change in price.
C)change in price divided by the change in quantity demanded.
D)percentage change in price divided by the percentage change in quantity demanded.
2
A price elasticity of demand of 0.5 means that:
A)demand is elastic.
B)quantity demanded changes 0.5 units for each 1% change in price.
C)quantity demanded changes 0.5% for each 1% change in price.
D)quantity demanded changes 5% for each 1% change in price.
3
Economist Patrick McCarthy estimated the price elasticity of demand for new cars to be 0.87. If the price of cars rose by 20%, one would expect the quantity of new cars demanded to:
A)fall 22.9%
B)rise 22.9%
C)fall 17.4%
D)rise 17.4%
4
Mark Blaug estimated that for every 1% increase in wages for child care workers, workers increased their supply of labor by 1.9%. This indicates that the elasticity of supply of labor to child care is:
A)inelastic.
B)elastic.
C)perfectly inelastic.
D)unitary elastic.
5
When a supply curve is vertical, it is:
A)perfectly inelastic.
B)perfectly elastic.
C)unit elasticity.
D)elastic.
6
Elasticity of supply is greater the longer the time period considered because the longer the time period,
A)the lower the marginal cost of production.
B)the more elastic is demand for a producer's product.
C)the more options are available for producers to change production.
D)the fewer options are available for producers to change production.
7
Economist Richard Voith has estimated elasticity of demand for commuter rail transportation to be 0.6 in the short-run and 1.6 in the long run. An increase in rail fares would:
A)lower revenue in both the short and long run.
B)raise revenue in both the short and long run.
C)raise revenue in the short run but lower revenue in the long run.
D)lower revenue in the short run but raise revenue in the long run.
8
The fact that airlines charge business travelers more for the same airplane seat than leisure travelers is an example of:
A)price discrimination where the carrier charges those with greater elasticity a higher fare.
B)price discrimination where the carrier charges those with greater elasticity a lower fare.
C)demand discrimination where the carrier charges those with greater elasticity a higher fare.
D)demand discrimination where the carrier charges those with greater elasticity a lower fare.
9
For inferior goods, income elasticity is:
A)greater than 0.
B)greater than 1.
C)less than 0.
D)equal to 1.
10
Suppose elasticity of demand is 2, elasticity of supply is 1, and demand increases by 10 percent. What will happen to price?
A)Price will rise by 3 and 1/3 percent.
B)Price will decline by 10 percent
C)Price will rise by 5 percent.
D)We cannot tell what will happen to price.





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