loading288 ? Chapter 5 /Elasticity and Its Application
Chapter 5
Elasticity and Its Application
TRUE/FALSE
1. Elasticity measures how responsive quantity is to changes in price. ANS: T DIF: 1 REF: 5-0
LOC: Elasticity TOP: Price elasticity of demand ANS: T DIF: 1 REF: 5-0
LOC: Elasticity TOP: Price elasticity of demand
NAT: Analytic MSC: Definitional NAT: Analytic MSC: Definitional
2. Measures of elasticity enhance our ability to study the magnitudes of changes.
3. The demand for bread is likely to be more elastic than the demand for solid-gold bread
plates. ANS: F DIF: 2 REF: 5-1
LOC: Elasticity TOP: Price elasticity of demand ANS: F DIF: 1 REF: 5-1
LOC: Elasticity TOP: Price elasticity of demand ANS: T DIF: 1 REF: 5-1
LOC: Elasticity TOP: Price elasticity of demand ANS: T DIF: 2 REF: 5-1
LOC: Elasticity TOP: Price elasticity of demand
NAT: Analytic MSC: Interpretive NAT: Analytic MSC: Interpretive NAT: Analytic MSC: Interpretive NAT: Analytic MSC: Interpretive
4. In general, demand curves for necessities tend to be price elastic.
5. In general, demand curves for luxuries tend to be price elastic.
6. Necessities tend to have inelastic demands, whereas luxuries have elastic demands.
7. Goods with close substitutes tend to have more elastic demands than do goods without close
substitutes. ANS: T DIF: 2 REF: 5-1
LOC: Elasticity TOP: Price elasticity of demand ANS: T DIF: 2 REF: 5-1
LOC: Elasticity TOP: Price elasticity of demand ANS: F DIF: 2 REF: 5-1
LOC: Elasticity TOP: Price elasticity of demand
NAT: Analytic MSC: Interpretive NAT: Analytic MSC: Interpretive NAT: Analytic MSC: Interpretive
8. The demand for Rice Krispies is more elastic than the demand for cereal in general.
9. The demand for soap is more elastic than the demand for Dove soap.
10. The demand for gasoline will respond more to a change in price over a period of five weeks
than over a period of five years. ANS: F DIF: 2 REF: 5-1
LOC: Elasticity TOP: Price elasticity of demand
NAT: Analytic MSC: Interpretive
11. Even the demand for a necessity such as gasoline will respond to a change in price,
especially over a longer time horizon. ANS: T DIF: 2 REF: 5-1
LOC: Elasticity TOP: Price elasticity of demand
NAT: Analytic MSC: Interpretive
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