Title: Calculating Price Elasticity
Course: TEST Course

Q: The size of the change in the quantity demanded of a good or service due to change in its price is measured by the elasticity of demand. When the percentage change in the quantity demanded for a good or service is less than the percentage change in price, the demand for that good or service is ________ and price elasticity is ________.
- elastic; greater than 1
- unitary; equal to 1
- inelastic; less than 1
A: inelastic; less than 1

Q: The size of the change in the quantity demanded of a good or service due to change in its price is measured by the elasticity of demand. When the percentage change in the quantity demanded for a good or service is more than the percentage change in price, the demand for that good or service is ________ and price elasticity is ________.
- inelastic; less than 1
- unitary; equal to 1
- elastic; greater than 1
A: elastic; greater than 1

Q: If the price elasticity of demand for gas in the short run is 0.3 and the price elasticity of demand for gas in the long run is 1.1, then which of the following is true?
- Demand for gas is elastic in the short run and inelastic in the long run.
- Demand for gas is unit elastic for both.
- Demand for gas is inelastic in the short run and elastic in the long run.
A: Demand for gas is inelastic in the short run and elastic in the long run.

Q: When elasticity of demand is equal to one and the change in the quantity demanded and the change in price are exactly proportional. This type of elasticity is described as ________.
- elastic
- inelastic
- unitary elastic
A: unitary elastic

Q: If the price of organic beef steak, regular beef steak, and pork chops each increased by 10%. Which of the products would you think was the most elastic. In other words, which has the most change to the quantity demanded because of the increase in price?
- non-organic beef steak
- non-organic pork chops
- organic beef steak
A: organic beef steak

Q: Which product would have the quantity demanded decrease the most (be the most elastic) to a price increase?
- non-organic whole chicken
- non-organic chicken thighs
- organic whole chicken
A: organic whole chicken

Q: What is the price elasticity of demand for designer shoes if for every 20% price increase clothing demand decreases by 5%. The price elasticity of demand would be
- -.5; inelastic
- -4; elastic
- -.25; inelastic
A: -.25; inelastic

Q: What is the price elasticity of demand for generic shoes if for every 10% price increase clothing demand decreases by 15%. The price elasticity of demand would be
- -.67; inelastic
- -.5; inelastic
- -1.5; elastic
A: -1.5; elastic

Q: Percentage change is calculated as
- the change in elasticity divided by the quantity.
- quantity divided by the change in quantity.
- the change in quantity divided by the quantity.
A: the change in quantity divided by the quantity.

Q: If you divide the change in quantity by the original quantity, you are calculating the
- quantity demanded change.
- change in elasticity.
- percentage change.
A: percentage change.

Q: The percentage change in quantity divided by the percentage change in quantity is the
- midpoint method.
- elasticity.
- growth rate.
A: growth rate.

Q: Another name for calculating percentage changes is computing
- the arc approach.
- the initial method.
- growth rates.
A: growth rates.

Q: Sylvia’s favorite burrito shop raised its prices from $6 to $9. The percentage change in price is
- 67%.
- 33%.
- 50%.
A: 50%.

Q: Kel loves orange soda. Unfortunately, the price has increased from $2 to $4. The percentage change in price is
- 67%.
- 33%.
- 50%.
A: 50%.

Q: Demelza purchased her favorite perfume three months ago, J’adore by Dior, for $75. She logs online to purchase one for her friends birthday and it is now $100. What is the percentage change in the perfume price?
- 25%
- 75%
- 33%
A: 33%

Q: Denzel bought headphones two months ago, Solo2 Beats by Dre, for $130. He gives them to his little brother and goes online to buy another for himself but they are now $160. What is the percentage change in the headphone’s price?
- 81%.
- 19%.
- 23%.
A: 23%.

Q: What is the name of the method that uses the average price and average quantity to calculate elasticity?
- The percent change approach
- The point elasticity approach
- The midpoint (arc) elasticity approach
A: The midpoint (arc) elasticity approach

Q: Which method for calculating elasticity uses the values of the average price and average quantity?
- The percent change approach
- The point elasticity approach
- The midpoint (arc) elasticity approach
A: The midpoint (arc) elasticity approach

Q: What is the name of the method for calculating elasticity that makes the math easier but is less accurate?
- The midpoint (arc) elasticity approach
- The percent change approach
- The point elasticity approach
A: The point elasticity approach

Q: The ________ approach for calculating elasticity makes for simple math, but is not as accurate.
- The midpoint (arc) elasticity approach
- The percent change approach
- The point elasticity approach
A: The point elasticity approach

Q: The price elasticity of demand measures the responsiveness of
- quantity demanded to a change in quantity supplied.
- price to a change in quantity demanded.
- quantity demanded to a change in price.
A: quantity demanded to a change in price.

Q: The price elasticity of demand measures the
- responsiveness of price to a change in quantity demanded.
- responsiveness of quantity demanded to a change in quantity supplied.
- responsiveness of quantity demanded to a change in price.
A: responsiveness of quantity demanded to a change in price.

Q: The elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in
- quantity supplied.
- the slope of the demand curve.
- price.
A: price.

Q: The elasticity of demand is defined as
- the percentage change in price divided by the percentage change in quantity demand.
- change in quantity demanded divided by quantity demanded.
- the percentage change in quantity demanded divided by the percentage change in price.
A: the percentage change in quantity demanded divided by the percentage change in price.

Q: The equation for calculating the price elasticity of demand
- does not use percent change in the numerator and denominator.
- takes into account slope.
- uses percent change in both the numerator and denominator.
A: uses percent change in both the numerator and denominator.

Q: If in your equation you are using the percent change in both the numerator and denominator, you are most likely
- calculating the price elasticity of supply.
- calculating the endpoint elasticity approach.
- calculating the price elasticity of demand.
A: calculating the price elasticity of demand.

Q: Using the midpoint method, calculate the price elasticity of demand of Good X using the following information: When the price of good X is $50, the quantity demanded of good X is 400 units. When the price of good X rises to $60, the quantity demanded of good X falls to 300 units.
- The price elasticity of demand for good X = 0.64.
- The price elasticity of demand for good X = 1.23.
- The price elasticity of demand for good X = 1.57.
A: The price elasticity of demand for good X = 1.57.

Q: Using the midpoint method, calculate the price elasticity of demand of Good Z using the following information: When the price of good Z is $10 (P1), the quantity demanded of good Z is 85 units (Q1). When the price of good Z rises to $15 (P2), the quantity demanded of good Z falls to 60 units (Q2).
- The price elasticity of demand for good Z = 0.52.
- The price elasticity of demand for good Z = 1.90.
- The price elasticity of demand for good Z = 0.86.
A: The price elasticity of demand for good Z = 0.86.

Q: Suppose the price for an Uber ride in Austin, TX decreases from $15 to $12 causing the quantity of rides demanded to increase from 1000 to 1600. Using the midpoint method, the price elasticity of demand for an Uber ride is ________.
- 3.0
- 0.50
- 2.08
A: 2.08

Q: The price for a fidget spinner is $5 with the quantity demanded at 7,000 a day. As time goes on the price for a fidget spinner drops to $3 and the quantity demanded increases to 12,500 a day. What is the price elasticity of demand for fidget spinners using the midpoint method?
- Price elasticity of demand = .97
- Price elasticity of demand = .51
- Price elasticity of demand = 1.0
A: Price elasticity of demand = 1.0

Q: Using the midpoint method, the price elasticity of demand is determined to be about 0.85. If there is a 10% decrease in the quantity demanded of the product then what effect would this have on the price of the product?
- A decrease in the price of the product from $8.50 to $10
- An increase in the price of the product from $8.50 to $10
- A 11.8% increase in the price of the product
A: A 11.8% increase in the price of the product

Q: The price for a cell phone case is $25 with the quantity demanded at 10,000 a day. As time goes on the price for a cell phone case increases to $30 and the quantity demanded decreases to 5,000 a day. Based on the price elasticity of demand using the midpoint method, this cell phone case is
- unit elastic
- inelastic
- elastic
A: elastic

Q: Based on the following information, calculate the price elasticity of demand using the midpoint method. The price for virtual reality goggles is $100 with the quantity demanded at 12,000 a day. On Black Friday the VR goggles were selling for $85 and the quantity demanded increased to 14,000 a day. The VR goggles are ________.
- elastic
- unit elastic
- inelastic
A: inelastic

Q: In the figure below, which of the following statements is true regarding elasticity?
- the upper part (when price is higher) of a demand curve is considered more inelastic.
- the upper part (when price is higher) of a demand curve is considered unit elastic.
- the upper part (when price is higher) of a demand curve is considered more elastic.
A: the upper part (when price is higher) of a demand curve is considered more elastic.

Q: Which part of the demand curve is considered the most inelastic?
- the upper part
- the middle part
- the lower part
A: the lower part

Q: Price elasticity of demand is
- the same as slope.
- the change in quantity demanded divided by the change in price.
- used to determine price sensitivity.
A: used to determine price sensitivity.

Q: Price elasticity of demand is closely related, but not the same as the slope of the demand curve. The more sensitive buyers are to changes in price the
- demand curve becomes more curved and less linear.
- the more the demand curve will shift.
- the flatter the demand curve.
A: the flatter the demand curve.

Q: As we move along a typical negatively sloping, linear demand curve
- the elasticity is constant.
- it results in elasticity and slope being the same.
- the slope is constant.
A: the slope is constant.

Q: One of the characteristics of a negatively sloping, linear demand curve is that
- the elasticity is constant.
- it results in elasticity and slope are the same.
- the slope is constant.
A: the slope is constant.

Q: The rate of change in units along the curve is the
- elasticity of a curve.
- run of a curve.
- slope of a curve.
A: slope of a curve.

Q: If you are looking at the rise over the run on a curve you are determining
- elasticity of a curve.
- run of a curve.
- slope of a curve.
A: slope of a curve.

Q: When the demand for a product has zero variance when there is a change in price, the good is ________.
- perfectly elastic
- unitarian
- perfectly inelastic
A: perfectly inelastic

Q: When a good is perfectly inelastic the
- product varies when there is a change in price.
- product graph is a perfectly horizontal line.
- product does not vary when there is a change in price.
A: product does not vary when there is a change in price.

Q: Analyze the following diagram:

Demand "D" represents a demand curve that is
- relatively inelastic.
- perfectly elastic.
- perfectly inelastic.
A: perfectly inelastic.

Q: Analyze the following diagram:

Demand "C" represents a demand curve that is
- perfectly inelastic.
- perfectly elastic.
- relatively inelastic.
A: relatively inelastic.

Q: Analyze the following diagram:

Demand "B" represents a demand curve that is
- perfectly inelastic.
- perfectly elastic.
- relatively elastic.
A: relatively elastic.

Q: Analyze the following diagram:

Demand "A" represents a demand curve that is
- relatively elastic.
- perfectly inelastic.
- perfectly elastic.
A: perfectly elastic.

Q: If the change % in quantity and % change in price from a graph for gasoline is less than 1, it is considered
- inelastic.
- unitary.
- elastic.
A: elastic.

Q: If you have a graph of the supply and demand for salt and calculate that the % change in quantity and % change in price is greater than 1, it is considered
- elastic.
- unitary.
- inelastic.
A: inelastic.

Q: The elasticity of supply is defined as the ________ change in quantity supplied divided by the ________ change in price.
- total; percentage
- marginal; percentage
- percentage; percentage
A: percentage; percentage

Q: The elasticity of supply is defined as the
- the percentage change in price divided by the percentage change in quantity supplied.
- the change in quantity supplied divided by quantity supplied.
- the percentage change in quantity supplied divided by the percentage change in price.
A: the percentage change in quantity supplied divided by the percentage change in price.

Q: Supply is said to be ________ when the quantity supplied is very responsive to changes in price.
- inelastic
- unit elastic
- elastic
A: elastic

Q: Elastic supply occurs if the change in quantity supplied is ________ to a change in price.
- relatively unresponsive
- the same
- relatively responsive
A: relatively responsive

Q: If the supply curve for a product is horizontal, then the elasticity of supply is
- equal to 1.
- equal to zero.
- equal to infinity.
A: equal to infinity.

Q: A perfectly elastic supply curve is
- upward sloping to the right.
- vertical.
- horizontal.
A: horizontal.

Q: Suppose the price elasticity of supply has been calculated as 0.80 for a particular product and the price increases by 5%. What would happen to the quantity supplied?
- It would increase by 8%.
- It would increase by 6.3%.
- It would increase by 4%.
A: It would increase by 4%.

Q: If the price elasticity of supply was calculated as 0.40 for a product and the price increases by 12%, what would happen to the quantity supplied?
- Quantity supplied would increase by 8%.
- Quantity supplied would increase by 6.3%.
- Quantity supplied would increase by 4.8%.
A: Quantity supplied would increase by 4.8%.

Q: If the price of Sperry shoes goes up from $100 to $120 and the quantity supplied increases from 800 to 900 pairs.
- It would increase by 1.65%.
- It would increase by 1.63%.
- It would increase by 0.65%.
A: It would increase by 0.65%.

Q: If the price of Saint’s Suits goes up from $200 to $220 and the quantity supplied increases from 700 to 800 suits.
- It would increase by 0.72%.
- It would increase by 1.49%.
- It would increase by 1.40%.
A: It would increase by 1.40%.