# QUESTION 1 If a 10 % decrease in price leads to a 5 % increase in quantity demanded, then the price elasticity of demand is 2.

QUESTION 1

1. If a 10 % decrease in price leads to a 5 % increase in quantity demanded, then the price elasticity of demand is 2.
2.  True
3.  False

QUESTION 2

1. When the price elasticity of demand is greater than 1, demand is called
2. A.nonelastic.
3. B.perfectly inelastic.
4. C.elastic.
5. D.unit-elastic.
6. E.inelastic.

QUESTION 3

1. Which of the following examples shows a price elasticity of demand equal to 3?
2. A.When the price falls from \$3 to \$1, the quantity demanded increases from 7 units to 9 units.
3. B.None of the above.
4. C.When the price falls from \$5 to \$3, the quantity demanded increases from 1.5 units to 2.5 units.
5. D.When the price falls from \$5 to \$3, the quantity demanded increases from 1 unit to 7 units.
6. E.When the price falls from \$5 to \$3, the quantity demanded increases from 1 unit to 3 units.

QUESTION 4

1. If the cross-price elasticity of demand for goods X and Y is zero, it would imply that
2. A.X and Y are complements.
3. B.price elasticity of demand for Y is zero.
4. C.X and Y are unrelated.
5. D.X and Y are substitutes.
6. E.price elasticity of demand for X is zero.

QUESTION 5

1. If the increase in price leads to an increase in total revenue, then demand is inelastic.
2.  True
3.  False

QUESTION 6

1. This question refers to information from the problem # 4, page 109, under Problems and Applications, chapter 5, in the textbook. Which of the following is true?
2. A. Since total revenue and quantity demanded move in the same direction, demand is elastic.
3. B. Since total revenue and quantity demanded move in the opposite direction, demand is inelastic.

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