Chapter 18

Question 1

An elasticity of 2 would be considered

Answer 1

Elastic

Question 2

A demand curve that is perfectly horizontal is

Answer 2

Perfectly elastic

Question 3

If demand is elastic and the price is raised

Answer 3

Quantity demanded will fall and total revenue will rise

Question 4

The advertiser wants to push her product’s demand curve

Answer 4

To the right and make less elastic

Question 5

The curve(showing a flat horizontal line) in the above graph

Answer 5

Is a perfectly elastic demand curve

Question 6

If a 1%change in the price leads to a .5% change in quantity demanded, then elasticity of demand is

Answer 6

.5

Question 7

If demand is inelastic and price is lowered, total revenue will

Answer 7

Fall

Question 8

Demand is elastic and price is lowered, total revenue will

Answer 8

Fall

Question 9

Demand is elastic when

Answer 9

Percentage change in quantity is greater then percentage change in price.

Question 10

In the graph(a\b\c\d\ along a straight line) unit elasticity occurs at about point

Answer 10

C

Question 11

The lowest elasticity in the (a\b\c\d\e) graph would be a point

Answer 11

E

Question 12

In elasticity of .75 means that a 1% change in the price will lead to a —–% change in the quantity demanded.

Answer 12

.75

Question 13

If price falls from $100 to $99 and quantity demanded rises fro 2 to 3, the demand is

Answer 13

Very elastic

Question 14

If a car dealership decides to offer a rebate to reduce the selling price of its cars and as a result finds an increase in its total revenues, then the demand for cars from this dealership is

Answer 14

Price elastic

Question 15

Which is true? Graph showing d1 crossing at middle with D2

Answer 15

D2 is more elastic than D1

Question 16

In general, the more the substitutes available for a good

Answer 16

The more elastic the demand for the good

Question 17

Total revenue will increase if price

Answer 17

Falls and demand is elastic

Question 18

Which of these elasticities is the least elastic?

Answer 18

1

Question 19

Cross elasticity of demand measure the response in

Answer 19

The quality of one good demanded to a change in the price of another good.

Question 20

A perfectly inelastic demand curve is

Answer 20

A vertical line

Question 21

If consumers are price sensitive, then

Answer 21

They will have elastic demand curves

Question 22

An elasticity of 1.5 means that 1% change in price will lead to a —–% change in quantity demanded.

Answer 22

1.5

Question 23

If more substitutes become available demand tends to become ——- elastic and over time demand tends to become —— elastic

Answer 23

More and more

Question 24

Income elasticity of demand measures how

Answer 24

The consumption of various goods and services respond to change in income.

Question 25

Which statement is true?

Answer 25

Advertisers try to make the demand for the products less elastic

Question 26

When the price of CD players increases 5%, quantity demanded decreases 5%. The price elasticity for CD players is

Answer 26

Unit elastic