CH5(QA)- elasticity - questions for basic microeconomics PDF

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Chapter 5Elasticity and Its ApplicationsMULTIPLE CHOICE In general, elasticity is a. the friction that develops between buyers and sellers in a market. b. a measure of how much government intervention is prevalent in a market. c. a measure of how competitive a market is. d. a measure of how much buy...

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Chapter 5/Elasticity and Its Applications  127

Cha pt er5 El as t i c i t yandI t sAppl i c at i ons MULTI PLECHOI CE 1 .

I ngener a l ,e l a s t i c i t yi s a .t hef r i c t i o nt hatde ve l opsbet wee nbuye r sa nds e l l e r si namar k et . b .ame as ur eofhow muc hgo ve r nme nti nt e r ve nt i oni spr e va l enti namar k e t . c . ame as ur eofhow c ompe t i t i veamar k eti s . d.amea s ur eofhow muc hbuyer sa nds e l l e r sr e s pondt oc ha nge si nma r ke tc ondi t i ons . ANS WER: d. ame as ur eofhow muc hbuyer sa nds e l l er sr e s pondt oc ha nge si nmar k etc ondi t i ons . TYPE:M SECTI ON: 1DI FFI CULTY:1 2 .

Whe ns t udyi nghow s omeev entorpol i cyaffec t samar k e t ,el a s t i c i t ypr ovi desi nf or ma t i onont he a .di r e c t i onoft heeffe c tont hema r k e t . b .ma gni t udeoft hee ffe c tont hema r k e t . c . effic i e nc yoft hee ffe c tont hema r k e t . d.e qui t yoft heeffec tont hema r ke t . ANS WER: b. ma gni t udeoft heeffec tont hemar k et . TYPE:M SECTI ON: 1DI FFI CULTY:2 3 .

Themos tba s i ct ool sofe c onomi c sa r e a .de mandands uppl y. b .pr i c eandqua nt i t y. c . monet ar yandfis c a lpol i c y . d.e l a s t i c i t yofde ma nda nds uppl y . ANS WER: a. dema ndands uppl y. TYPE:M SECTI ON: 1DI FFI CULTY:1 4 .

Thepr i c ee l as t i c i t yofde ma ndme a s ur eshow r e s pons i ve a .buye r sar et oac ha ngei ni nc ome . b .s e l l er sar et oac hangei npr i c e . c . buye r sar et oac ha ngei npr i c e . d.s e l l er sa r et oac hangei nbuyer s ’i nc ome s . ANS WER: c . buye r sar et oachangei npr i c e . TYPE:M SECTI ON: 1DI FFI CULTY:1 5 .

Thepr i c ee l as t i c i t yofde ma ndme a s ur es a .abuye r ’ sr es pons i ve ne s st oac hangei nt hepr i c eofagood. b .t hei nc r e a s ei nde ma ndasa ddi t i onalbuye r se nt ert hema r ke t . c . ho w muc hmor eofagoodc ons umer swi l lde ma ndwheni nc ome sr i s e . d.t hei nc r e as ei ndema ndt hatwi l loc c urf r om ac ha ngei noneoft henonpr i c edet er mi na nt sofde ma nd. ANS WER: a. abuye r ’ sr e s pons i v e ne s st oac ha ngei nt hepr i c eofagood. TYPE:M KEY1:D S ECTI ON:1OBJ ECTI VE:1RANDOM:Y 6 .

Thec onc eptofe l as t i c i t yi sus e dt o a .anal yz eho w muc ht hee c onomyi sc a pa bl eofex pa ndi ng. b .de t er mi net hel e ve lofgo ve r nme nti nve nt i oni nt hee c o nomy. c . anal yz es uppl ya ndde ma ndwi t hgr e a t e rpr e c i s i on. d.c a l c ul at ec ons umerc r e di tpur c has e s . ANS WER: c . ana l yz es uppl ya nddema ndwi t hgr e a t erpr ec i s i on. TYPE:M SECTI ON: 1DI FFI CULTY:2

Chapter 5/Elasticity and Its Applications  128 7 .

Dema ndi ss a i dt obee l as t i ci f a .t hepr i c eoft hegoodr e s pondss ubs t a nt i al l yt oc ha nge si nde mand. b .de mands hi f t ss ubs t ant i al l ywhe nt hepr i c eoft hegoodc ha nge s . c . buye r sdonotr es pondmuc ht oc ha nge si nt hepr i c eoft hegood. d.t hequa nt i t yde mandedr e s pondss ubs t ant i a l l yt oc ha nge si nt hepr i c eoft hegood. ANS WER: d. t hequa nt i t yde ma nde dr e s pondss ubs t a nt i al l yt oc ha nge si nt hepr i c eoft hegood. TYPE:M SECTI ON: 1DI FFI CULTY:1 8 .

Dema ndi ss a i dt obei ne l a s t i ci f a .t hequa nt i t yde ma nde dc ha nge sonl ys l i ght l ywhe nt hepr i c eoft hegoodc ha nge s . b .de mands hi f t sonl ys l i ght l ywhent hepr i c eoft hegoodc ha nge s . c . buye r sr es ponds ubs t a nt i al l yt oc ha ngesi nt hepr i c eoft hegood. d.t hepr i c eoft hegoodr e s pondsonl ys l i ght l yt oc ha nge si nde ma nd. ANS WER: a. t hequa nt i t yde ma nde dc hange sonl ys l i ght l ywhe nt hepr i c eoft hegoodc ha nge s . TYPE:M SECTI ON: 1DI FFI CULTY:2 9 .

Ani ne l a s t i cde ma ndme a nst hat a .c ons umer sha r dl yr e s pondt oac ha ngei npr i c e . b .c ons umer sr e s ponds ubs t a nt i al l yt oac ha ngei npr i c e . c .c ons umer sr e s ponddi r ec t l yt oac ha ngei ni nc ome . d.t hec ha ngei nqua nt i t yde mandedi sequalt ot hec ha ngei npr i c e . ANS WER: a. c ons ume r sha r dl yr es pondt oac ha ngei npr i c e . TYPE:M SECTI ON: 1DI FFI CULTY:1

1 0 . Whe nqua nt i t ydemande dr es pondsonl ys l i ght l yt oc ha nge si npr i c e , de ma ndi ss a i dt obe a .uni te l as t i c . b .e l a s t i c . c .i nel a s t i c . d.pe r f e c t l yi nel a s t i c . ANS WER: c . i ne l a s t i c . TYPE:M SECTI ON: 1DI FFI CULTY:1 1 1 . I fagoodi sanec e s s i t y ,de ma ndf ort hegoodwoul dt e ndt obe a .e l a s t i c . b .hor i z ont a l . c . uni te l as t i c . d.i ne l a s t i c . ANS WER: d. i ne l a s t i c . TYPE:M SECTI ON: 1DI FFI CULTY:2 1 2 . Whe nqua nt i t ydemande dr es pondss ubs t a nt i al l yt oc ha nge si npr i c e , dema ndi ss a i dt obe a .e l a s t i c . b .i ne l as t i c . c . uni te l as t i c . d.pe r f e c t l ye l a s t i c . ANS WER: a. e l a s t i c . TYPE:M SECTI ON: 1DI FFI CULTY:1 1 3 . I fagoodi sal uxur y , demandf ort hegoodwoul dt e ndt obe a .i ne l as t i c . b .e l a s t i c . c . uni te l as t i c . d.hor i z ont a l . ANS WER: b. e l a s t i c . TYPE:M SECTI ON: 1DI FFI CULTY:2 1 4 . Thee l as t i c i t yofde ma ndf orl ux ur i est e ndst obe a .gr e a t e rt ha n1. b .l e s st ha n1. c . eq ua lt o1 . d.e qua lt o0 . ANS WER: a. gr ea t e rt ha n1. TYPE:M SECTI ON: 1DI FFI CULTY:2

Chapter 5/Elasticity and Its Applications  129 1 5 . I faper s o nonl yoc c a s i ona l l yenj o ysac upofc offee , hi sde ma ndf orc offe ewoul dbe a .hor i z ont a l . b .i ne l as t i c . c . uni te l as t i c . d.e l a s t i c . ANS WER: d. e l a s t i c . TYPE:M SECTI ON: 1DI FFI CULTY:2 1 6 . A pe r s o nwhoha shi ghc hol e s t e r ola ndmus te x e r c i s ea nhoure ve r yda yha swha tt ypeofde mandf ore xe r c i s e e q ui pment? a .e l a s t i c b .uni te l as t i c c .i nel a s t i c d.we a k ANS WER: c . i ne l a s t i c TYPE:M SECTI ON: 1DI FFI CULTY:2 1 7 . Dema ndf oragoodwoul dt e ndt obemor ei ne l a s t i ct he a .f e we rt heav a i l a bl es ubs t i t ut es . b .l onge rt het i mepe r i odc ons i der e d. c . mor et hegoodi sc o ns i der e dal uxur ygood. d.mor enar r owl ydefine dt hema r k e ti s . ANS WER: a. f e we rt heav ai l a bl es ubs t i t ut es . TYPE:M SECTI ON: 1DI FFI CULTY:2 1 8 . Choc ol at eChi pCooki eDoughi c ec r e a m wo ul dt e ndt oha veve r ye l as t i cde ma ndbe c a us e a .i tmus tbee a t e nqui c kl y . b .t hema r ke ti sbr oadl ydefine d. c .t he r ear ef ew s ubs t i t ut e s . d.ot herfla vor sofi c ec r e a ma r eal mos tper f e c ts ubs t i t ut e s . ANS WER: d. ot herfla vor sofi c ec r e am ar eal mos tpe r f ec ts ubs t i t ut es . TYPE:M SECTI ON: 1DI FFI CULTY:2 1 9 . Wer t her sc andyt e ndst oha veane l a s t i cdemandbec aus e a .t hec a ndymar ke ti st oobr oa dl ydefined. b .t he r ear ema nyc l os es ubs t i t ut e sf orWer t her s . c . Wer t her sar ec ons i de r e dbys omet obeanec e s s i t y . d.i ti sus ua l l ye a t e nqui c kl yandt he r e f or et het i mehor i zoni ss hor t . ANS WER: b. t he r ear emanyc l os es ubs t i t ut e sf orWer t her s . TYPE:M SECTI ON: 1DI FFI CULTY:2 2 0 . The r ea r eve r yf e w, i fa ny , goods ubs t i t ut e sf ormot oroi l .The r e f or e , a .t hes uppl yofmot oroi lwoul dt e ndt obepr i c ee l as t i c . b .t hede ma ndf ormot oroi lwoul dt endt obepr i c ee l a s t i c . c .t hede ma ndf ormot oroi lwoul dt endt obepr i c ei ne l as t i c . d.t hedema ndf ormot oroi lwoul dt e ndt obei nc omee l as t i c . ANS WER: c . t hedema ndf ormot oroi lwoul dt endt obepr i c ei ne l as t i c . TYPE:M SECTI ON: 1DI FFI CULTY:2 2 1 . Hol di nga l lot herf or c e sc ons t a nt ,whe nt hepr i c eofgas ol i ner i s es , t henumbe rofgal l onsofga s o l i nedema nde d woul df a l ls ubs t a nt i a l l yov erat eny ea rpe r i odbe c a us e a .buye r st e ndt obemuc hl es ss e ns i t i vet oac hangei npr i c ewhengi ve nmor et i met or e a c t . b .buye r swi l lha v es ubs t ant i al l ymor ei nc omeov erat e nye a rpe r i od. c . buye r st e ndt obemuc hmor es e ns i t i vet oac ha ngei npr i c ewhe ngi ve nmor et i met or ea c t . d.Noneoft he s eans wer sar ec or r e c t . ANS WER: c . buye r st e ndt obemuc hmor es e ns i t i vet oachangei npr i c ewhengi venmor et i met or e a c t . TYPE:M SECTI ON: 1DI FFI CULTY:2

Chapter 5/Elasticity and Its Applications  130 2 2 . A goodwi l lha veamor ei ne l a s t i cde ma nd a .t hegr e a t e rt hea vai l abi l i t yofc l os es ubs t i t ut e s . b .t hena r r owe rt hede fini t i onoft hemar k e t . c .t hel onge rt hepe r i odoft i me . d.i fi ti sc ons i de r e dane c e s s i t y . ANS WER: d. i fi ti sc ons i de r e dane c e s s i t y . TYPE:M SECTI ON: 1DI FFI CULTY:2 2 3 . Whe nt hepr i c eofbubbl egum i s$0 . 50 ,t hequa nt i t yde ma nde di s4 0 0pac kspe rda y .Whe nt hepr i c ef a l l st o$ 0 . 4 0, t hequa nt i t yde ma nde di nc r e a s e st o6 0 0 .Gi ve nt hi si nf or ma t i onandus i ngt hemi dpoi ntme t hod,youknow t ha tt he de ma ndf orbubbl egum i s a .i ne l as t i c . b .e l a s t i c . c . uni te l a s t i c . d.pe r f e c t l yi ne l as t i c . ANS WER: b. e l a s t i c . TYPE:M SECTI ON: 2DI FFI CULTY:3 2 4 . Ec onomi s t sc omput et hepr i c ee l a s t i c i t yofde manda st he a . pe r c e nt a gec ha ngei nt hepr i c edi vi de dbyt heper c e nt a gec ha ngei nqua nt i t yde ma nde d. b .c ha ngei nqua nt i t yde ma nde ddi vi de dbyt hec hangei nt hepr i c e . c . pe r c e nt a gec ha ngei nt hequant i t yde ma nde ddi vi dedbyt heper c e nt a gec ha ngei npr i c e . d.pe r c e nt a gec ha ngei nt hequa nt i t yde mandeddi vi de dbyt heper c e nt a gec ha ngei ni nc ome . ANS WER: c . per c e nt a gec hangei nt hequa nt i t yde mande ddi vi de db yt heper c e nt a gec ha ngei npr i c e . TYPE:M SECTI ON: 1DI FFI CULTY:2 2 5 . Mos te c onomi s t sr e por tt hee l a s t i c i t yofde ma ndas a .t hea bs ol ut eva l ueoft hea c t ualnumbe r . b .ane ga t i venumbe r ,s i nc epr i c ea ndqua nt i t yde mande dmovei noppos i t edi r e c t i ons . c . ape r c e nt age ,s i nc ebot ht henume r a t ora ndde nomi na t ora r epe r c e nt age s . d.adol l a ra mount , s i nc ewear eme a s ur i ngt hec ha ngei npr i c e . ANS WER: a . t hea bs ol ut eva l ueoft hea c t ualnumbe r . TYPE:M SECTI ON: 1DI FFI CULTY:2 2 6 . Themi dpoi ntme t hodi sus e dt oc omput ee l a s t i c i t ybe c aus ei t a . aut oma t i c al l yc omput e sapos i t i venumbe ri ns t e a dofane ga t i v enumbe r . b .us e st hes a mee qua t i ont ha ti sus e dt oc omput es l ope . c . gi ve st hes a means we rr e ga r dl e s soft hedi r e c t i onofc ha nge . d.a ut oma t i c a l l yr oundsqua nt i t i e st ot hene a r e s twhol euni t . ANS WER: c . gi ve st hes a mea ns we rr e gar dl e s soft hedi r e c t i onofc ha nge . TYPE:M SECTI ON: 1DI FFI CULTY:2 2 7 . Whi c hoft hef ol l owi ngi sNOTade t e r mi na ntoft hepr i c ee l a s t i c i t yofde ma ndf orapr oduc t ? a .t i me b .pr i c e c . ma r ke tde fini t i on d.s ubs t i t ut e s ANS WER: b. pr i c e TYPE:M SECTI ON: 1DI FFI CULTY:1 2 8 . Thepr i c ee l as t i c i t yofde mandf oragoodme as ur e show wi l l i ng a .c ons umer sa r et omov ea wa yf r om t hegooda spr i c er i s e s . b .fir msa r et opr oduc emor eofagooda spr i c er i s e s . c .c ons umer sa r et obuymor eofagooda spr i c er i s e s . d.fir msar et opr oduc emor eofagoodaspr i c ef a l l s . ANS WER: a . c ons ume r sa r et omov ea wa yf r om t hegoodaspr i c er i s e s . TYPE:M SECTI ON: 1DI FFI CULTY:2

Chapter 5/Elasticity and Its Applications  131 2 9 . Thegr e a t e rt hepr i c ee l a s t i c i t yofde ma ndt he a . mor el i ke l yt hepr oduc ti sane c e s s i t y . b .s ma l l e rt her e s pons i ve ne s sofqua nt i t yde mande dt opr i c e . c . gr e a t e rt hepe r c e nt a gec ha ngei npr i c eo ve rt hepe r c e nt a gec hangei nqua nt i t yde mande d. d.gr e a t e rt her e s pons i ve ne s sofqua nt i t yde ma nde dt opr i c e . ANS WER: d. gr e a t e rt her e s pons i ve ne s sofqua nt i t yde ma nde dt opr i c e . TYPE:M SECTI ON: 1DI FFI CULTY:2 3 0 . Suppos et he r ei sa6per c e nti nc r e as ei nt hepr i c eofgoodXa ndar e s ul t i ng6per c e ntde c r e a s ei nt hequa nt i t yofX de ma nde d.Pr i c ee l a s t i c i t yofde mandf o rXi s a . 1. b .6. c .0 . d.i nfini t e . ANS WER: a . 1. TYPE:M SECTI ON: 1DI FFI CULTY:2 3 1 . Suppos et hepr i c eofTwi nki e si sr e duc e df r om $ 1. 4 5t o$ 1 . 2 5a nd,asar e s ul t ,t hequant i t yofTwi nki e sde mande d i nc r e a s e sf r om 2 , 0 00t o2 , 20 0 .Us i ngt hemi dpoi ntme t hod,t hepr i c ee l as t i c i t yofde mandf orTwi nki e si nt hegi ve n pr i c er a ngei s a . 2. 0 0 . b .1. 5 5 . c .1 . 00 . d.. 6 4 . ANS WER: d. . 6 4 . TYPE:M SECTI ON: 1DI FFI CULTY:3 3 2 . I ft hepr i c ee l as t i c i t yofdema ndf oragoodi s4 . 0 ,t he na1 0pe r c e nti nc r e a s ei npr i c ewo ul dr e s ul ti na a . 4. 0pe r c e ntde c r e a s ei nt hequa nt i t yde ma nde d. b .10pe r c e ntde c r e a s ei nt hequa nt i t yde ma nde d. c . 40pe r c e ntde c r e a s ei nt hequa nt i t yde ma nde d. d.4 0 0pe r c e ntde c r e a s ei nt hequant i t yde mande d. ANS WER: c . 40per c e ntde c r e as ei nt hequant i t yde ma nde d. TYPE:M SECTI ON: 1DI FFI CULTY: 3 3 3 . I fa1 5pe r c e nti nc r e a s ei npr i c ec a us e sa3 0pe r c e ntde c r e a s ei nquant i t yde mande d,t hi spr oduc tmi ght a . ha venoc l os es ubs t i t ut e . b .beal uxur y . c . bepa r tofabr oa dl yde fine dma r ke t . d.bei nas hor tt i mehor i z on. ANS WER: b. beal uxur y . TYPE:M SECTI ON: 1DI FFI CULTY: 3 3 4 . Thema i nr e as onf orus i ngt hemi dpoi ntmet hodi st ha ti t a . gi ve st hes a means we rr e ga r dl e s soft hedi r e c t i onofc ha nge . b .us e sf e we rnumbe r s . c .r oundspr i c e st ot hene ar e s tdol l a r . d.r oundsquant i t i e st ot hene ar e s twhol euni t . ANS WER: a . gi ve st hes a mea ns we rr e gar dl e s soft hedi r e c t i onofc ha nge . TYPE:M SECTI ON: 1DI FFI CULTY:2 3 5 . De ma ndi se l a s t i ci fe l as t i c i t yi s a .l e s st ha n1 . b .e qua lt o1 . c .e qua lt o0 . d.gr e a t e rt han1 . ANS WER: d. gr e a t e rt ha n1. TYPE:M SECTI ON: 1DI FFI CULTY:1

Chapter 5/Elasticity and Its Applications  132 3 6 . De ma ndi si ne l a s t i ci fe l a s t i c i t yi s a .l e s st ha n1 . b .e qua lt o1 . c . gr e a t e rt ha n1. d.e qua lt o0 . ANS WER: a . l e s st ha n1 . TYPE:M SECTI ON: 1DI FFI CULTY:1 3 7 . De ma ndi suni te l as t i ci fe l as t i c i t yi s a .l e s st ha n1 . b .gr e a t e rt ha n1. c .e qua lt o1 . d.e qua lt o0 . ANS WER: c . e qua lt o1 . TYPE:M SECTI ON: 1DI FFI CULTY:1 3 8 . Ac c o r di ngt ot hegr aph,t hes e c t i onoft hede mandc ur v e l abe l e dA r e pr es e nt st he a .e l a s t i cs e c t i onoft hede ma ndc ur v e . b .i ne l as t i cs e c t i onoft hede ma ndc ur v e . c . uni te l a s t i cs e c t i onoft hede ma ndc ur ve . d.pe r f e c t l ye l a s t i cs e c t i onoft hedema ndc ur ve . ANS WER: a . e l a s t i cs e c t i onoft hede ma ndc ur v e . TYPE:M SECTI ON: 1DI FFI CULTY:2 3 9 . Ac c o r di ngt ot hegr aph,t hepoi ntont hede ma ndc ur v e l abe l e dBr e pr e s e nt st he a .e l a s t i cs e c t i onoft hede ma ndc ur v e . b .i ne l as t i cs e c t i onoft hede ma ndc ur v e . c . uni te l a s t i cs e c t i onoft hede ma ndc ur ve . d.pe r f e c t l ye l a s t i cs e c t i onoft hedema ndc ur ve . ANS WER: c . uni te l as t i cs e c t i onoft hede mandc ur ve . TYPE:M SECTI ON: 1DI FFI CULTY: 2 4 0 . Ac c o r di ngt ot hegr aph,t hes e c t i onoft hede mandc ur v el a be l edCr e pr e s e nt st he a .e l a s t i cs e c t i onoft hede ma ndc ur v e . b .pe r f e c t l ye l a s t i cs e c t i onoft hede ma ndc ur ve . c . uni te l a s t i cs e c t i onoft hede ma ndc ur ve . d.i ne l as t i cs e c t i onoft hede ma ndc ur ve . ANS WER: d. i ne l a s t i cs e c t i onoft hede ma ndc ur v e . TYPE:M SECTI ON: 1DI FFI CULTY: 2 4 1 . Ac c o r di ngt ot hegr aph,t hee l a s t i c i t yofde mandf r om poi ntA t opoi ntB,us i ngt hemi dpoi ntme t hodwo ul dbe a . 1. b .1. 5 . c .2 . d.2 . 5 . ANS WER: d. 2. 5 . TYPE:M SECTI ON: 1DI FFI CULTY: 2 4 2 . Ac c o r di ngt ot hegr aph,t hee l a s t i c i t yofde mandf r om poi ntB t opoi ntC,us i ngt hemi dpoi ntme t hodwoul dbe a . 0. 5 . b .0. 7 5 . c .1 . 0 . d.1 . 3 . ANS WER: b. 0. 7 5 . TYPE:M SECTI ON: 1DI FFI CULTY: 2

Chapter 5/Elasticity and Its Applications  133 4 3 . Ac c o r di ngt ot hegr aph,i ft hepr i c ede c r e a s e df r om $1 8t o$ 6,wha twoul dha ppe nt ot ot alr e ve nue ? a . Tot a lr e ve nuewo ul di nc r e a s eby$ 12 0 0a nddemandwoul dbee l as t i c . b .Tot a lr e ve nuewo ul di nc r e a s eby$ 80 0a ndde ma ndwoul dbee l a s t i c . c . Tot a lr e ve nuewo ul dde c r e a s eb y$ 12 00a nddemandwoul dbei ne l as t i c . d.To t a lr e v e nuewoul dde c r e a s eb y$ 80 0a ndde mandwoul dbei ne l as t i c . ANS WER: a . Tot a lr e ve nuewoul di nc r e a s eby$ 12 00anddemandwoul dbee l as t i c . TYPE:M SECTI ON: 1DI FFI CULTY:3 4 4 . Whe nt hepr i c eofki t t e nswa s$2 5e ac h,t hepe ts hops ol d2 0pe rmont h.Whe nt he yr a i s e dt hepr i c et o$ 35e ac h,t he y s ol d1 4pe rmont h.Thee l a s t i c i t yofde ma ndf orki t t e nswoul dbe a . 1. 6 6 . b .1. 0 6 . c .0 . 94 . d.0 . 6 0. ANS WER: b. 1. 0 6 . TYPE:M SECTI ON: 1DI FFI CULTY:3 4 5 . Whe nt hel oc a lus e dbooks t or epr i c e se c onomi c sbooksa t$ 15 . 00e a c h,t he yge ne r a l l ys e l l7 0pe rmont h.I ft he yl o we r t hepr i c et o$ 7. 0 0e a c ht he ys e l l9 0. Gi ve nt hi s , weknow t ha tt hee l a s t i c i t yofde ma ndf ore c onomi c sbooksi s a . 2. 9 1 ,s ot hi ss t or es houl dl o we rpr i c et or ai s et ot a lr e ve nue . b .2. 9 1 ,s ot hi ss t or es houl dr a i s epr i c et or a i s et ot a lr e ve nue . c . 0. 3 4 ,s ot hi ss t or es houl dl o we rpr i c et or ai s et ot a lr e ve nue . d.0 . 3 4,s ot hi ss t or es houl dr ai s epr i c et or ai s et ot a lr e ve nue . ANS WER: d. 0. 3 4 ,s ot hi ss t or es houl dr ai s epr i c et or ai s et ot a lr e ve nue . TYPE:M SECTI ON: 1DI FFI CULTY:3 4 6 . De ma ndi ss a i dt obei ne l as t i ci ft he a . qua nt i t yde ma nde dc ha nge spr opor t i ona t e l ymor et ha npr i c e . b .pr i c ec hange spr opor t i ona t e l ymor et ha ni nc ome . c . qua nt i t yde ma nde dc ha nge spr opor t i ona t e l yl e s st ha npr i c e . d.qua nt i t yde ma nde dc hange spr opor t i ona t e l yt hes ameaspr i c e . ANS WER: c . qua nt i t yde ma nde dc ha nge spr opor t i ona t e l yl e s st ha npr i c e . TYPE:M SECTI ON: 1DI FFI CULTY:2 4 7 . De ma ndi ss a i dt obeuni te l a s t i ci f a . qua nt i t yde ma nde dc ha nge sbyt hes a mepe r c e ntast hepr i c e . b .qua nt i t yde ma nde dc ha nge sbyal a r ge rper c e ntt ha nt hepr i c e . c .t hede ma ndc ur v es hi f t sbyt hes a mepe r c e nt a gea mounta st hepr i c e . d.qua nt i t yde ma nde ddoe snotr e s pondt oac ha ngei npr i c e . ANS WER: a . qua nt i t yde ma nde dc ha nge sbyt hes a mepe r c e ntast hepr i c e . TYPE:M SECTI ON: 1DI FFI CULTY:2 4 8 . El a s t i c i t yofde ma ndi sc l os e l yr e l a t e dt ot hes l opeoft hede ma ndc ur v e .Themor er e s pons i vebuye r sa r et oac ha nge i npr i c e , t hede mandc ur vewi l lbe a .s t e e pe r . b .f ur t he rt ot her i ght . c . fla t t e r . d.c l os e rt ot heve r t i c alaxi s . ANS WER: c . fla t t e r . TYPE:M SECTI ON: 1DI FFI CULTY:2 4 9 . Thefla t t e rt hedemandc ur vet hr oughagi ve npoi nt ,t he a . gr e a t e rt hepr i c ee l a s t i c i t yofde mand. b .s ma l l e rt hepr i c ee l a s t i c i t yofde ma nd. c .c l os e rt hepr i c ee l as t i c i t yofde ma ndwi l lbet ot hes l opeoft hec ur ve . d.mor ee qua lt hepr i c ee l as t i c i t yofde ma ndwi l lbet ot hes l opeoft hec ur v e . ANS WER: a . gr e a t e rt hepr i c ee l a s t i c i t yofde ma nd. TYPE:M SECTI ON: 1DI FFI CULTY:3

Chapter 5/Elasticity and Its Applications  134 5 0 . A pe r f e c t l ye l a s t i cde ma ndi mpl i e st ha t a . buye r swi l lnotr es pondt oa nyc ha ngei npr i c e . b .anyr i s ei npr i c eabovet ha tr e pr es e nt e dbyt hede ma ndc ur vewi l lr e s ul ti nnoout putde ma nde d. c . pr i c ea ndqua nt i t yde mande dr e s pondpr opor t i ona l l y . d.pr i c ewi l lr i s eb ya ni nfini t ea mountwhe nt he r ei sac hangei nqua nt i t yde ma ...