Ask Question, Ask an Expert


Ask Business Economics Expert

Multiple choice problems related to price elasticity of demand

1) Suppose a department store has a sale on its silverware. If the price of a place-setting is reduced from $30 to $20 and the quantity demanded increases from 3,000 place-settings to 5,000 place-settings, illustrate what is the price elasticity of demand for silverware?

a) 0.8

b) 1.0

c) 1.25 (Arc elasticity)

d) 1.50

2) Why is the price elasticity of demand a relative measure? Which is, why is elasticity measured in percentage terms rather than in absolute terms?

a) So which the coefficient of elasticity will not be negative.

b) Because the absolute price or quantity demanded of a product is irrelevant to the elasticity measure.

c) Because absolute measures do not account for the direction of the change in quantity.

d) So the coefficient of elasticity will not be dependent on the physical units of the good.

3) An increase in price will result in an increase in total revenue if demand is:

a) unit elastic.

b) perfectly elastic.

c) relatively elastic.

d) inelastic.

4) Which of the subsequent is a plausible reason which restaurants offer "Senior Citizen Discounts"?

a) Senior citizens are not very sensitive to changes in price

b) Senior citizens tend to have elastic demands for restaurant meals.

c) Senior citizens are easily fooled by "come-ons" and are therefore frequently victims of price discrimination.

d) Senior citizens tend to have inelastic demands for restaurant meals.

5) Coffee and tea would be expected to have:

a) A negative cross-price elasticity of demand

b) Positive income elasticity of demand with respect to each other.

c) a positive cross-price elasticity of demand

d) Negative income elasticity of demand with respect to each other.

6) In the run up to the war in Iraq which began in 2003, one of the many concerns raised was which a war could result in a decrease in the supply of oil. At the same time, the U.S. economy was having a hard time recovering from the most recent recession and, as a result, incomes of many consumers had decreased (due to layoffs, wage cuts, and so forth). All else constant, it was reasonable to predict, with certainty, which the combination of these two factors would cause the equilibrium:

a) quantity of oil to increase.

b) quantity of oil to decrease

c) price of oil to increase.

d) price of oil to decrease

7) Understanding how individual sectors of the economy will respond to changes in key economic variables gives us a better understanding of how the macro economy behaves.

a) True

b) False

8) The market demand for a good is determined by vertically summing the demand curves of individual consumers. (Horizontal summation will be there)

a) True

b) False

9) Suppose a monopolistically competitive company comes up with a new innovation which allows it to earn above-normal economic profits. Given the nature of the market in which it operates, over time those profits will be competed away as new competitors enter the market.

a) True

b) False

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M917427

Have any Question? 

Related Questions in Business Economics

Question 1 for the following situations calculate

Question 1 . For the following situations, calculate elasticity of demand and comment on the answer.                             When the price of commodity X was Rs. 12/-, 40 units it were demanded. When the price decre ...

Assessment task in this assessment students are required to

ASSESSMENT TASK: In this assessment, students are required to demonstrate their ability to apply economic principles learnt in this subject to analysing real-world business operations and evaluate how their long-run busi ...

In the united states as in most countries we value the

In the United States, as in most countries, we value the benefits of a free and competitive market. This suggests an interesting question: what if there were to be no Antitrust laws or other regulations on business activ ...

Cite the sources used to answer this question provide the

Cite the source(s) used to answer this question. Provide the source(s) below your response and apply APA guidelines for references. 1) Class, is it possible for a business to show an accounting profit, but actually earn ...

Assignmentmoral and ethical requirements should serve as

Assignment Moral and ethical requirements should serve as drivers which encourage a business to invest in or spend money on cybersecurity products, services, and programs. You have been invited to participate in a "light ...

Assignmentpart idirections please write a paper that is at

Assignment PART I Directions: Please write a paper that is at least two to three pages in length in which you address the questions below. Write your paper in APA format with at least one cited scholarly reference. Revie ...

1what is the production possibilities curve and how is it

1. What is the production possibilities curve and how is it useful? 2. What 4 factors contribute to determining any point in this model? 3. How would we apply this framework to the real world? 4. You are planning to expa ...

Assignment -consider the following cobb douglas production

Assignment - Consider the following Cobb Douglas production function where Y is maize output, X 1 is labour input, and X 2 is the capital. Data for estimating this equation is given in the Table below. Y = β 0 X 1i β_1 X ...

Free trade and restricted trade - benefits and cost1-2

Free Trade and Restricted Trade - Benefits and Cost 1-2 paragraphs APA format/ no plagarism Using your own words, define both free and restricted trade. What do you feel are the benefits and the cost to having free trade ...

Assignmentinstructions1 select an illegal activity and

Assignment Instructions 1. Select an illegal activity and transform/mask its' true purpose with the disguise of a legitimate business operation. In other words, create a start-up business that would be viewed as a legal ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro