Macroeconomics Principles and Policy 11th Edition by William J. Baumol – Test Bank

Macroeconomics Principles and Policy 11th Edition by William J. Baumol – Test Bank

Chapter 6—Demand and Elasticity

TRUE/FALSE

1. The market demand curve shows how the quantity demanded of a product, during a specified time period, changes as the price of that product changes.

ANS: T PTS: 1 DIF: Easy NAT: Analytic
LOC: Elasticity TOP: Elasticity: The Measure of Responsiveness

2. The law of demand states that a lower price increases the amount of a commodity that people are willing to buy.

ANS: T PTS: 1 DIF: Easy NAT: Analytic
LOC: Supply and demand TOP: Elasticity: The Measure of Responsiveness

3. The demand curve depicts quantities demanded that have been gathered as prices have changed over time.

ANS: F PTS: 1 DIF: Difficult NAT: Analytic
LOC: Supply and demand TOP: Elasticity: The Measure of Responsiveness

4. The quantity demanded in a market depends on many things, but the concept of elasticity focuses on the effect of changes in the price of the good.

ANS: T PTS: 1 DIF: Moderate NAT: Analytic
LOC: Elasticity TOP: Elasticity: The Measure of Responsiveness

5. Elasticity is a measure of the responsiveness of change in quantity demanded to a change in price.

ANS: T PTS: 1 DIF: Easy NAT: Analytic
LOC: Elasticity TOP: Elasticity: The Measure of Responsiveness

6. Elasticity of demand equals the ratio of the percentage change in quantity demanded to the percentage change in the price of the good.

ANS: T PTS: 1 DIF: Easy NAT: Analytic
LOC: Elasticity TOP: Elasticity: The Measure of Responsiveness

7. Elasticity of demand equals the ratio of the percentage change in the price of a good to the percentage change in the quantity demanded.

ANS: F PTS: 1 DIF: Easy NAT: Analytic
LOC: Elasticity TOP: Elasticity: The Measure of Responsiveness

8. Price elasticity of demand can be written as percentage change in Q divided by percentage change
in P.

ANS: T PTS: 1 DIF: Easy NAT: Analytic
LOC: Elasticity TOP: Elasticity: The Measure of Responsiveness

9. Elasticity of demand is calculated using percentage changes in both price and quantity.

ANS: T PTS: 1 DIF: Easy NAT: Analytic
LOC: Elasticity TOP: Elasticity: The Measure of Responsiveness

10. Price elasticity of demand is a numerical measure of how much quantity demanded rises as price falls or quantity demanded falls as price rises.

ANS: T PTS: 1 DIF: Easy NAT: Analytic
LOC: Elasticity TOP: Elasticity: The Measure of Responsiveness