Question

15) One reason why the demand for gasoline is inelastic is because

A) substitutes for gas abound.

B) substitutes for gas are hard to find.

C) gasoline is a luxury item.

D) people have a long time to shop around for automobiles that use less gas.

E) buses run on diesel fuel rather than gasoline.

16) The longer the time that has elapsed since the price of a good changed, the

A) more elastic the demand for that good. B) steeper the demand curve.

C) less elastic the demand for that good. D) smaller the amount of that good bought. E) fewer substitutes available for the good.

17) The demand for a necessity generally is

A) very elastic.

B) infinitely elastic.

C) unaffected by income. D) inelastic.

E) unit elastic.

18) What is the formula for the price elasticity of demand? The percentage change in the

A) quantity demanded divided by the percentage change in the price of a substitute or complement. B) quantity supplied divided by the percentage change in price.

C) quantity demanded divided by the percentage change in price.

D) quantity demanded divided by the percentage change in income.

E) equilibrium quantity demanded divided by the equilibrium price.

19) If the price elasticity of demand for a good is 2, then a 10 percent increase in the price of that good ____ the quantity demanded by ____ percent.

A) increases; 20 B) decreases; 2 C) decreases; 10 D) decreases; 20 E) increases; 8

20) Suppose the price of a ticket to a Lenny Kravitz concert is $41 and at that price, the quantity of tickets demanded is 17,000 per concert. Using the midpoint method of calculating percentage changes, if Mr. Kravitz raises the price to $48 and the quantity demanded decreases to 16,000, the price elasticity of demand for his concert tickets is

A) 15.73. B) 6.06. C) 1.00. D) 0.39. E) 0.93

21) If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded, the price elasticity of demand equals

A) 1.33.

B) 0.75.

C) 4.00.

D) 3.44.

E) None of the above answers are correct.

Answer 1