stion ECO 201 1. The price elasticity of demand measures the: 

1. The price elasticity of demand measures the:
a. responsiveness of a good’s price to a change in quantity demanded
b. adaptability of suppliers when a change in demand alters the price of a good
c. responsiveness of quantity demanded to a change in a good’s price
d. adaptability of buyers when there is a change in demand
e. responsiveness of quantity supplied to a change in quantity demanded of the entire demand curve

2. If the demand curve is a vertical line:
a. demand is perfectly elastic
b. quantity demanded is independent of price
c. demand is unitarily elastic
d. price is determined solely by demand

3. If demand is elastic, then:
a. the percentage change in quantity demanded is larger than the percentage change in price
b. supply is inelastic
c. prices can neither rise nor fall
d. the percentage change in quantity demanded is smaller than the percentage change in price
e. supply is elastic

4. If the demand curve is a horizontal line:
a. demand is perfectly elastic
b. demand is perfectly inelastic
c. demand is unitarily elastic
d. demand is relatively inelastic

5. When demand is price elastic, a decrease in price results in a(n):
a. decrease in total revenue on the good
b. unfavorable shift in tastes and preferences
c. increase in supply of the good
d. increase in total revenue on the good

6. At the point where demand is unitarily elastic:
a. increases in price will decrease total revenue
b. increases in price will increase total revenue
c. increases in income will decrease quantity demanded
d. increases in price will increase quantity demanded
e. changes in price will not change the total revenue

7. For which of the following types of goods would demand be most elastic?
a. necessities
b. goods with many substitutes
c. goods that require only a small portion of the buyer’s budget
d. goods with vertical supply curves

8. For which of the following is demand likely to be the most inelastic?
a. a good for which there are no close substitutes
b. goods which constitute a large portion of a consumer’s budget
c. a good that is no longer being produced
d. a good for which close substitutes are easily obtained Use the following information for questions 9 through 13.

Period 1 Period 2
Good 1
Price $15 $20
Quantity 20,000 18,000
Good 2
Price $25 $20
Quantity 12,000 18,000

9. The price elasticity (Ed) for Good 1 is:
a. -.368
b. -2/3
c. -3/2
d. -2.714
e. -3

10. The price elasticity (Ed) for Good 2 is:
a. -.435
b. -.556
c. -1
d. -1.545
e. -1.8

11. Which of the goods have an inelastic demand?
a. Both goods have inelastic demand
b. Good 1
c. Good 2