Chapter 5 Practice Quiz KEY PDF

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Prof Wendy Doell...

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1. Anna, the owner of a cake shop wants to increase total revenue, what should she do? a. If the demand for cake is elastic, she should raise the price. *b. If the demand for cake is elastic, she should lower the price. c. If the demand for a cake is inelastic, she should not change the price. d. If the demand for cake is perfectly inelastic, she should lower the price.

2. Price elasticity of demand is defined as ________. *a. the percentage change in quantity demanded divided by the percentage change in price. b. the slope of the demand curve. c. the percentage change in price divided by the percentage change in quantity demanded. d. the slope of the demand curve divided by the price.

3. Refer to Table 5.1. Lowering the price from $40 to $35 would increase total revenue. This means that __________ *a. Demand must be elastic b. Demand must be inelastic c. Demand must be unit elastic d. Demand must be perfectly elastic

4. Refer to Table 5.6. The elasticity of demand is _________ in the range $2 to $4. a. 2 *b. 0.33 c. 3.00 d. 1000

5. If cola and iced tea are good substitutes for consumers, then it is likely that ________. a. their income elasticities are less than zero. b. their price elasticities of supply are less than one . *c. their cross-price elasticities are greater than zero. d. their price elasticities of demand are less than one....