Q1. Suppose that a given MP3 player now costs $300, and sales are now 5,000 units per month. The manufacturer has determined that if the price is reduced by $25, the demand will increase by 250 units per month. Calculate and describe the elasticity of demand.

A)   -10.0, elastic.

B)   -0.56, inelastic.

C)   -0.56, elastic.

Q2. If the demand curve for a given product is a straight line, this indicates that:

A)   demand is unit elastic.

B)   demand is more elastic at higher prices.

C)   elasticity is constant along the demand curve.

Q3. If the price of World Cup Soccer tickets increases from $40 a ticket to $50 a ticket and the quantity demanded of tickets stays the same,  demand for the tickets is:

A)    elastic, but not perfectly elastic.

B)    inelastic, but not perfectly inelastic.

C)    perfectly inelastic.

Q4. When demand for a good is inelastic, a higher price will:

A)   fail to reduce the quantity demanded for the good.

B)   lead to an increase in total expenditures for the good.

C)   have no impact on the demand for the good.

Q5. If a good has elastic demand, a small price decrease will cause:

A)   a larger increase in quantity demanded.

B)   no change in the quantity demanded.

C)   a larger decrease in the quantity demanded.

答案和详解如下：

Q1. Suppose that a given MP3 player now costs $300, and sales are now 5,000 units per month. The manufacturer has determined that if the price is reduced by $25, the demand will increase by 250 units per month. Calculate and describe the elasticity of demand.

A)   -10.0, elastic.

B)   -0.56, inelastic.

C)   -0.56, elastic.

Correct answer is B)

Elasticity is the percentage change in quantity, divided by the percentage change in price. The percentage change in quantity is 250 / ((5,000 + 5,250)/2) = 0.049 or 4.9%. The percentage change in price is -25 / ((300 + 275)/2) = -0.087 or -8.7%. 4.9 / -8.7 = -0.56. Elasticity with an absolute value of less than 1 is considered inelastic.

Q2. If the demand curve for a given product is a straight line, this indicates that:

A)   demand is unit elastic.

B)   demand is more elastic at higher prices.

C)   elasticity is constant along the demand curve.

Correct answer is B)

Elasticities will be greater (in absolute value) at higher prices.

Q3. If the price of World Cup Soccer tickets increases from $40 a ticket to $50 a ticket and the quantity demanded of tickets stays the same,  demand for the tickets is:

A)    elastic, but not perfectly elastic.

B)    inelastic, but not perfectly inelastic.

C)    perfectly inelastic.

Correct answer is C)         

Since the quantiy of tickets demanded stayed the same after the price changed, the demand curve would have to be vertical which is a perfectly inelastic demand curve.

Q4. When demand for a good is inelastic, a higher price will:

A)   fail to reduce the quantity demanded for the good.

B)   lead to an increase in total expenditures for the good.

C)   have no impact on the demand for the good.

Correct answer is B)

When demand is relatively inelastic, consumers do not reduce their quantity demanded very much when the price increases. That is, a given percentage increase in price results in a smaller percentage reduction in quantity demanded. Thus, total expenditures on the good increase. "Fail to reduce the quantity demanded for the good" is inaccurate because that would only be true if demand was perfectly inelastic.

Q5. If a good has elastic demand, a small price decrease will cause:

A)   a larger increase in quantity demanded.

B)   no change in the quantity demanded.

C)   a larger decrease in the quantity demanded.

Correct answer is A)

If a good has elastic demand, a small price decrease will cause a larger increase in the quantity demanded.

All right.

thx

谢谢楼主

ok