Question

1. If a good has a price elasticity of demand equal to 0, ________.

a) the smallest increase in its price will cause consumers to stop consuming it completely

b) the quantity demanded of the good will be completely unaffected by a change in its price

c) the demand curve for the good will be upward-sloping

2. At the midpoint of a downward-sloping, linear demand curve for a good, the price elasticity of demand for the good is ________.

a) equal to one

b) between zero and one

c) equal to zero

d) greater than one

3. At all points below the midpoint of a downward-sloping, linear demand curve for a good, the value of the price elasticity of demand for the good is ________.

a) less than one

b) equal to infinity

c) equal to one

d) greater than one, but less than infinity

d) the percentage change in the quantity demanded of the good will be greater than the percentage change in its price

Answer 1

1. If a good has a price elasticity of demand equal to 0, the quantity demanded of the good will be completely unaffected by a change in it's price.

Answer: option (b).

2. At a midpoint of a downward sloping, linear demand curve for a good, the elasticity of demand for good is equal to one.

Answer: option (a).

3. All points below the mid point of downward sloping, linear demand curve for a good, the value of price elasticity of demand for good is less than one (inelastic)

Answer: option (a).