1.

If a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of
demand is
a. 0.75.
b. 1.25.
c. 1.33.
d. 1.60.

2. If a 20% increase in price for a good results in a 15% decrease in quantity demanded, the price elasticity of
demand is
a. 0.75.
b. 1.25.
c. 1.33.
d. 1.60.

3. If a 10% decrease in price for a good results in a 20% increase in quantity demanded, the price elasticity of
demand is
a. 0.50.
b. 1.
c. 1.5.
d. 2.

4. If a 6% decrease in price for a good results in a 2% increase in quantity demanded, the price elasticity of
demand is
a. 0.02.
b. 0.33.
c. 3.
d. 4.

5. When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A
rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price
elasticity of demand for good A is
a. 1.50, and an increase in price will result in an increase in total revenue for good A.
b. 1.50, and an increase in price will result in a decrease in total revenue for good A.
c. 0.67, and an increase in price will result in an increase in total revenue for good A.
d. 0.67, and an increase in price will result in a decrease in total revenue for good A.

6. Consider luxury weekend hotel packages in Las Vegas. When the price is $250, the quantity demanded is
2,000 packages per week. When the price is $280, the quantity demanded is 1,700 packages per week. Using
the midpoint method, the price elasticity of demand is about
a. 1.43, and an increase in the price will cause hotels' total revenue to decrease.
b. 1.43, and an increase in the price will cause hotels' total revenue to increase.
c. 0.70, and an increase in the price will cause hotels' total revenue to decrease.
d. 0.70, and an increase in the price will cause hotels' total revenue to increase.

7. When the local used bookstore prices economics books at $15 each, it generally sells 70 books per month. If it
lowers the price to $7, sales increase to 90 books per month. Given this information, we know that the price
elasticity of demand for economics books is about
a. 2.91, and an increase in price from $7 to $15 results in an increase in total revenue.
b. 2.91, and an increase in price from $7 to $15 results in a decrease in total revenue.
c. 0.34, and an increase in price from $7 to $15 results in an increase in total revenue.
d. 0.34, and an increase in price from $7 to $15 results in a decrease in total revenue.
 8. Fiona’s Fish Emporium increased its total monthly revenue from $1,500 to $1,800 when it raised the price of
tropical fish from $5 to $9. The price elasticity of demand for Fiona’s Fish Emporium is
a. 0.57.
b. 0.70.
c. 1.43.
d. 2.20.

9. Melvin’s Magnets earned $200 in total revenue last month when it sold 100 souvenir magnets. This month it
earned $300 in total revenue when it sold 60 souvenir magnets. The price elasticity of demand for Marvin’s
Magnets is
a. 0.27.
b. 0.58.
c. 1.25.
d. 1.71.

10. Suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million bushels. When the price of
wheat is $3 per bushel, farmers can sell 8 million bushels. Which of the following statements is true? The
demand for wheat is
a. income inelastic, so an increase in the price of wheat will increase the total revenue of wheat
farmers.
b. income elastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.
c. price inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.
d. price elastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.

11. Suppose that when the price of ginger ale is $2 per bottle, firms can sell 4 million bottles. When the price of
ginger ale is $3 per bottle, firms can sell 2 million bottles. Which of the following statements is true?
a. The demand for ginger ale is income inelastic, so an increase in the price of ginger ale will increase
the total revenue of ginger ale producers.
b. The demand for ginger ale is income elastic, so an increase in the price of ginger ale will increase
the total revenue of ginger ale producers.
c. The demand for ginger ale is price inelastic, so an increase in the price of ginger ale will increase
the total revenue of ginger ale producers.
d. The demand for ginger ale is price elastic, so an increase in the price of ginger ale will decrease the
total revenue of ginger ale producers.

12. Suppose that 50 hot dogs are demanded at a particular price. If the price of hot dogs rises from that price by
5 percent, the number of hot dogs demanded falls to 48. Using the midpoint approach to calculate the price
elasticity of demand, it follows that the
a. demand for hot dogs in this price range is unit elastic.
b. price increase will decrease the total revenue of hot dog sellers.
c. price elasticity of demand for hot dogs in this price range is about 1.22.
d. price elasticity of demand for hot dogs in this price range is about 0.82.

13. Suppose that 500 candy bars are demanded at a particular price. If the price of candy bars rises from that price
by 10 percent, the number of candy bars demanded falls to 480. Using the midpoint approach to calculate the
price elasticity of demand, it follows that the
a. demand for candy bars in this price range is unit elastic.
b. price increase will decrease the total revenue of candy bar sellers.
c. price elasticity of demand for candy bars in this price range is about 0.41.
d. price elasticity of demand for candy bars in this price range is about 0.24.