Explain why the price elasticity of demand for many primary commodities is relatively low while the price elasticity of demand for manufactured products is relatively high.

Demand is said to be elastic when the:

1. change in quantity demanded is less than the change in price.

2. change in quantity demanded is greater than the change in price.

3. percentage change in quantity demanded is greater than the percentage change in price.

4. percentage change in quantity demanded is less than the percentage change in price.

If the demand for a product is elastic, then:

A. The change in the quantity demanded is greater than the change in income.

B. The percentage change in quantity demanded is greater than the percentage in price.

C. Buyers are not very sensitive to a change in price.

D. The percentage change in price is greater than the percentage change in quantity demanded.

Demand is ________ if the percentage change in quantity demanded is less than the percentage change in price.

If the demand for iPods is price elastic, then

A. the percentage change in quantity demanded is less than the percentage change in price (in absolute value).

B. quantity demanded is not responsive to changes in price.

C. the percentage change in quantity demanded is equal to the percentage change in price.

D. the percentage change in quantity demanded is greater than the percentage change in price (in absolute value).

The price elasticity of demand measures:

A) the extent to which prices are flexible and respond to market forces.

B) the responsiveness of quantity demanded to a change in price.

C) the responsiveness of demand when price is held constant and demand increases or decreases.

D) the responsiveness of price to a change in quantity demanded.

If a 3-percent increase in the price of corn flakes causes a 6-percent decline in the quantity demanded, what is the elasticity of demand?

The basic formula for the price elasticity of demand coefficient is:

A. absolute decline in quantity demanded/absolute increase in price.

B. percentage change in quantity demanded/percentage change in price.

C. absolute decline in price/absolute increase in quantity demanded.

D. percentage change in price/percentage change in quantity demanded.

A survey of 260 store customers yielded 78 respondents who said they would buy cut flowers more often if the price was 25 % lower. The store estimates they have 10,000 different customers who buy 2,200 bouquets of flowers a year. What would bouquet sales be if prices were cut by 25 % and the survey results were true ?

True or False:

If the price elasticity of demand is equal to 1, then demand is unit elastic.

When quantity moves proportionately to the same amount as price, demand is:

a. elastic, and the price elasticity of demand is 1.

b. perfectly elastic, and the price elasticity of demand is infinitely large.

c. perfectly inelastic, and the price elasticity of demand is 0.

d. unit elastic, and the price elasticity of demand is 1.

Economists compute the price elasticity of demand as the

a. percentage change in price divided by the percentage change in quantity demanded.

b. change in quantity demanded divided by the change in the price.

c. percentage change in quantity demanded divided by the percentage change in price.

d. percentage change in quantity demanded divided by the percentage change in income.

When the absolute value of the own-price elasticity of demand is zero, demand is:

a. perfectly inelastic.

b. perfectly elastic.

c. unitary.

d. elastic, but not perfectly.

True or False. Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in price.