MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) The price elasticity of demand is a units-free measure of the responsiveness of the ________ when 1) _______
all other influences on buying plans remain the same.
A) quantity demanded to a change in income
B) quantity demanded to a change in the price of a substitute or complement
C) price to a change in quantity demanded
D) quantity demanded of a good to a change in its price
E) none of the above
2) The concept used by economists to indicate the responsiveness of the quantity demanded of a 2) _______
good to a change in its price is the
A) elasticity of supply.
B) cross elasticity of demand.
C) substitute elasticity of demand.
D) income elasticity of demand.
E) price elasticity of demand.
3) A price elasticity of demand of 2 means that a 10 percent increase in price will result in a 3) _______
A) 5 percent decrease in quantity demanded.
B) 2 percent decrease in quantity demanded.
C) 2 percent increase in quantity demanded.
D) 20 percent increase in quantity demanded.
E) 20 percent decrease in quantity demanded.
4) If a large percentage drop in the price level results in a small percentage increase in the quantity 4) _______
A) the price elasticity of demand is zero.
B) the price elasticity of demand is close to infinity.
C) demand is elastic.
D) demand is unit elastic.
E) demand is inelastic.
5) The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent. We 5) _______
conclude that the demand for apples is
A) perfectly inelastic.