Chapter 4 Elasticity: A Measure of Responsiveness

11) Suppose that in a month the price of oranges increases from $.75 to $1. At the same time, the quantity of oranges demanded decreases from 100 to 80. The price elasticity of demand for oranges (calculated using the initial value formula) is

A) 0.75.

B) 0.6.

C) 0.25.

D) 20.

12) Suppose that in a month the price of tulips increases from $1 to $1.50. At the same time, the quantity of tulips demanded decreases from 200 to 190. The price elasticity of demand for tulips (calculated using the initial value formula) is

A) 0.1.

B) 0.5.

C) 10.

D) 20.

Table 4.1

13) Refer to Table 4.1. A change in the price of hamburgers caused the change in quantity demanded shown in the table. The price elasticity of demand for hamburgers (calculated using the initial value formula) is

A) 0.25.

B) 0.50.

C) 1.

D) 1.75.

Table 4.2

14) Refer to Table 4.2. A change in the price of calculators caused the change in quantity demanded shown in the table. The price elasticity of demand for calculators, using the initial-value formula, is

A) 25.

B) 1.75.

C) 0.75.

D) 0.25.

Table 4.3

15) Refer to Table 4.3. A change in the price of computers caused the change in quantity demanded shown in the table. The price elasticity of demand (calculated using the initial value formula) is

A) 4.

B) 1.

C) 0.25.

D) 0.125.

16) Refer to Table 4.3. After calculating the price elasticity of demand for computers, we can say the demand for computers is

A) upward sloping.

B) inelastic.

C) unitary elastic.

D) elastic.

17) The quantity of pencils sold is 1000 at the unit price $0.5. Suppose the price elasticity of demand for pencils by the initial value method is 2, and you would like to increase the quantity sold to 1200. Then the new price for pencils must be

A) $0.05.

B) $0.25.

C) $0.30.

D) $0.45.

18) At Tony's Restaurant, the quantity of large pizzas sold is 200 at the unit price $15. Suppose the price elasticity of demand for pizzas by the initial value method is 1.5, and you would like to increase the quantity sold to 250. Then the new price must be

A) $13.

B) $12.50.

C) $11.50.

D) $11.25.

19) The quantity of TVs sold is 100 at the unit price $200. Suppose the price elasticity of demand for TVs by the initial value method is 2.0, and you would like to decrease the unit price for TVs to $150. Then the new quantity sold must be

A) 125.

B) 150.

C) 200.

D) 250.

20) The midpoint formula for elasticity of demand solves the problem of

A) whether elasticity of demand is really positive or negative.

B) whether to use quantity or price in the numerator.

C) which price or quantity to use as the initial value of the variable.

D) whether to use quantity demanded or supplied.