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ECON QUIZ 4-3

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____ 1. Total revenue is determined by
a.
multiplying the price of a product by the product.
b.
measuring the elasticity of a quantity demanded.
c.
dividing the price of the product by demand.
d.
dividing the demand for the product by its price.

____ 2. The relationship between the change in price and total revenue for an elastic demand curve is
a.
variable.
c.
inverse.
b.
unit elastic.
d.
direct.

____ 3. All of the following are determinants of demand elasticity EXCEPT
a.
whether the purchase of the product can be delayed
b.
whether there are adequate substitutes for the product.
c.
whether the purchase of the product requires a large portion of income.
d.
whether the product has utility.

____ 4. A company decreases the price of a gallon of milk by 10 percent and the company's total revenues fall significantly. What term best describes the demand for milk?
a.
elastic
c.
unit elastic
b.
inelastic
d.
demand elastic

____ 5. All of the following products have relatively inelastic demand EXCEPT
a.
a physician's services.
c.
stereo equipment.
b.
tobacco products.
d.
prescription drugs.

Matching

Match each statement with the correct item below.
a.
the extent to which a change in price causes a change in the quantity demanded
b.
describes demand when a given change in price causes a relatively smaller change in the quantity demanded
c.
describes demand when a given change in price causes a proportional change in the quantity demanded
d.
analysis of the effects of a price change to determine elasticity
e.
a measure of responsiveness that shows how a dependent variable such as quantity responds to an independent variable such as price
f.
describes demand when a given change in price causes a relatively larger change in the quantity demanded

____ 6. elasticity

____ 7.