308 ? Chapter 5 /Elasticity and Its Application
Figure 5-2
PricePaPbD1D3D2Quantity59. Refer to Figure 5-2. As price falls from Pa to Pb, which demand curve represents the most elastic demand?
a. D1 b. D2 c. D3
d. All of the above are equally elastic.
ANS: A
NAT: Analytic MSC: Applicative
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Price elasticity of demand
60. Refer to Figure 5-2. As price falls from Pa to Pb, we could use the three demand curves to calculate three
different values of the price elasticity of demand. Which of the three demand curves would produce the smallest elasticity? a. D1 b. D2 c. D3
d. All of the above are equally elastic.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Price elasticity of demand
Table 5-1 Good Price Elasticity of Demand A 1.3 B 2.1 61. Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-2? a. A is a luxury and B is a necessity.
b. A is a good several years after a price increase, and B is that same good several days after the price
increase.
c. A is a Kit Kat bar and B is candy. d. A has fewer substitutes than B.
ANS: D
NAT: Analytic MSC: Analytical
DIF: 3
LOC: Elasticity
REF: 5-1
TOP: Price elasticity of demand
Chapter 5 /Elasticity and Its Application ? 309
62. Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-2?
a. A is grapes and B is fruit. b. A is T-shirts and B is socks.
c. A is train tickets before cars were invented, and B is train tickets after cars were invented. d. A is diamond