 Questions and Answers

 1.
 If you slow down buying because of a price increase, your demand is
◦ A.
◦ Elastic.
◦ B.
◦ Inelastic.
◦ C.
◦ Strong.
◦ D.
◦ Normal.
 2.
 If you spend a very small proportion of your income on a product, then
 Discuss
◦ A.
◦ The demand for that product will tend to be price elastic.
◦ B.
◦ The demand for that product will tend to be price inelastic.
◦ C.
◦ You will wait for a sale before you buy the item.
◦ D.
◦ You will stop buying it if the prices rises even a little.
 .
 When the percentage change in the price exceeds the
percentage change in quantity demanded, then demand is
◦ A.
◦ Inelastic.
◦ B.
◦ Unitary elastic.
◦ C.
◦ Elastic.
◦ D.
◦ Irrelevant.
 4.
 Which of the following is an example of a good with
inelastic demand?
◦ A.
◦ Fresh lobster
◦ B.
◦ HD flat panel tv sets
◦ C.
◦ Laptop computers
◦ D.
◦ Life-saving medicine
 5.
 If a good has a lot of substitutes, then its demand will tend to
be
◦ A.
◦ Elastic.
◦ B.
◦ Inelastic.
◦ C.
◦ Unitary.
◦ D.
◦ None of these.
 6.
 . Mercedes makes a luxury car called the Maybach which
sells for approximately $490,000. base price. One would
expect the demand for this product to be...
◦ A.
◦ Elastic.
◦ B.
◦ Inelastic.
◦ C.
◦ Unitary.
◦ D.
◦ None of these.
 7.
 If billionaire Bill Gates decides he has to have a Maybach,
for him it has demand that
◦ A.
◦ Elastic.
◦ B.
◦ Inelastic.
◦ C.
◦ Unitary.
◦ D.
◦ None of these.
 8.
 Total revenue is defined as
 Discuss
◦ A.
◦ The amount of profit a company makes.
◦ B.
◦ The amount of profit a company makes after paying taxes.
◦ C.
◦ The total amount of money a company takes in for selling its
goods.
◦ D.
◦ ) the amount of money affected by price elasticity.
 A graph that shows a product with elastic demand will tend to
be...
◦ A.
◦ More straight up and down.
◦ B.
◦ Flatter.
◦ C.
◦ Backward bending.
◦ D.
◦ Finding equilibrium faster.
 10.
 Starbucks raised the price of a cup of coffee by 5 cents in early
2007, only to find that there was little or no change in the
number of cups sold. What does this say about Starbucks coffee
demand?
 Discuss
◦ A.
◦ It defies the laws of supply and demand
◦ B.
◦ It acts like the demand for any luxury good.
◦ C.
◦ It is extremely inelastic.
◦ D.
◦ there is a lot of competition.
 11.
 Netflix raised its price by 60% and lost 3% of its
customers. This means its demand must be
 Discuss
◦ A.
◦ Elastic
◦ B.
◦ Inelastic
◦ C.
◦ Unitary
◦ D.
◦ None of these.
 1. The price of a gasoline increases from .75 to
1.00 and the amount you buy falls from 5 litters
to 7 litters then your elasticity of demand would
be calculated as: