Elasticity Graphs

Use the graph below to answer questions 1 &2

1. Which of the demand curves shown in this graph is perfectly inelastic?A. D1B. D2C. D3D. D4E. D5

2. Which of the demand curves shown in this graph is perfectly elastic?A. D1B. D2C. D3D. D4E. D5

3. If the price elasticity of demand for point 2 equals 1, what must also be true?A. The value of price elasticity at point 1 is less than 1B. Point 3 also has a price elasticity of demand equal to 1C. The value of price elasticity at point 3 is inelasticD. Point 3 is perfectly inelasticE. Point 1 is perfectly inelastic

Price Elasticity of Demand Questions

4. Gas prices rose by 12%, percent following a hurricane in the Gulf of Mexico. As a result, the amount of gas purchased in the week fell by 3%, percent following the price increase.

What is the price elasticity of demand for gas in the week following the price increase?

A. 0.25B. -0.75C. 4D. 2.5E. 0.5

5. The price elasticity of demand for a brand of breakfast cereal is 5.

Based on this elasticity, what will be the percentage change in the quantity of breakfast cereal bought as a result of a 5%, percent decrease in the cereal's price?

A. -25%B. +25%C. -1%D. +1%E. 5%

The table below contains the demand schedule for grapes.

6. What is the price elasticity of demand for grapes when the price increases from $0.50 to $1.00?A. 5B. 1C. 2D. 0.25E. 0.2

Other Types of Elasticity Questions

7. When the price of pickles increased 20%, percent, the quantity supplied of pickles increased 80%, percent.

What is the price elasticity of supply and how is that value interpreted?

A. 4; elasticB. 4; inelasticC. 0.25; inelasticD. 0.25; normal goodE. 6; elastic

8. When Eric's income was $500, per week he bought 10 fish tacos per week, but when his income increased to $600, per week he started buying 15 fish tacos per week.

What is Eric's income elasticity of demand for fish tacos?

A. 2B. 0.1C. 4D. .4E. 2.5

9. Farmers can easily grow raspberries or strawberries in the same soil using the same inputs and achieve the same output per acre in pounds.

All else equal, what is the value of the relative price elasticity of supply of raspberries over two days or two years?

A. relatively inelastic in two days; relatively elastic in two yearsB. relatively more elastic in two days than in 2 yearC. relatively more elastic in two years than in two daysD. relatively elastic in two days; relatively inelastic in two yearsE. relatively inelastic in two days; relatively inelastic in two years

10. Burgin's income elasticity for gizmos is -5.

What happens when Burgin's income increases by 10%, percent?

A. He will buy 5 more gizmosB. He will buy$50 worth of gizmos moreC. He will buy 5%, percent fewer gizmosD. He will buy 50%, percent more gizmosE. He will buy 50%, percent fewer gizmos

11. When Pam's income increased by 10%, percent, she bought 5% fewer containers of yogurt.

What kind of good does Pam consider yogurt?

A. Complementary with peachesB. A normal necessityC. A normal luxuryD. An inferior goodE. Substitute for eggs

12. If the cross-price elasticity of demand for good X with respect to good Y equals 0, how is that value interpreted?

A. These goods are complements, and the quantity demanded of good X increases if the price of good Y decreases.B. These goods are necessities, and the quantity demanded of good X never changes even if the price of good X

changes.C. These goods are normal goods, and a change in buyers income increases the quantity demanded of good X.D. These goods are substitutes, and the quantity demanded of good X decreases if the price of good Y decreases.E. These goods are unrelated, and a change in the price of good Y has no effect on the quantity of good X demanded.

13. When the price of canned pickle juice increased 50%, percent, the quantity supplied of pickle juice increased 40%, percent.

What is the price elasticity of supply, and how is that value interpreted?

A. 0.8; inelasticB. 0.8; elasticC. .10; unit elasticD. .10; inelasticE. 1.25; elastic

14. The makers of a brand of potato chip know that the prices of other products might increase soon. The cross-price elasticity of potato chips and four other goods are given below.

Which product is the most complementary for chips?

A. Product WB. Product XC. Product YD. Product Z

15. Mera is researching consumer reactions. She has determined that when the price of hand lotion increases 1%, percent, the quantity demanded of tissues increases 10%.

What kind of elasticity is being measured, and what can Mera determine based on this information?

A. Price elasticity of demand; tissues are a necessity.B. Price elasticity of demand; lotion is a luxury.C. Cross-price elasticity of demand; these goods are substitutes.D. Cross-price elasticity of demand; these goods are unrelated.E. Income elasticity of demand; tissues are a normal good.

Total Revenue Questions

16. If the price elasticity of demand for books is 5, what happens if a bookseller increases the price of books?A. There is no change to the bookseller’s total revenue.B. The bookseller’s total revenue decreases.C. Consumer spending on books increases.D. The bookseller’s total revenue increases.E. The price elasticity of demand will decrease.

17. If the price elasticity of demand for apples is 3, then what will be the impact on total revenue if price increases?A. Total revenue will increaseB. Total revenue will not changeC. Total revenue will fall to zeroD. Total revenue will decreaseE. Total revenue triples

18. According to the total revenue rule, what happens when you raise the price on a good with inelastic demand?A. Total revenue increases.B. Total revenue falls to zero.C. Consumer spending on the good stays the sameD. Total revenue doesn’t change.E. Total revenue decreases.

19. When the price of jackfruit decreased 50%, percent, total revenues earned by jackfruit sellers decreased.What can be concluded based on this information?

A. The demand for jackfruit is price inelastic.B. The demand for jackfruit is elastic.C. The price elasticity of demand for jackfruit is 5D. The price elasticity of demand for jackfruit is 111.E. The demand for jackfruit is unit elastic

20. Zikri wants to increase total revenue at his restaurant. The price elasticity of demand for several dishes that he serves are given in the table below.

What dish should Zikri increase the price of if he wants to increase total revenue?A. Nasi lemakB. PulutC. RendangD. SatayE. Ulam