Question 1

Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Accepted Answer

A)  purses and backpacks 
B)  sofas and dining room tables 
C)  manicures and pedicures 
D)  shoes and socks 
E)  trucks and sedans 
A)  purses and backpacks 
B)  sofas and dining room tables 
C)  manicures and pedicures 
D)  shoes and socks 
E)  trucks and sedans

Question 2

Which of the following would NOT affect a good's price elasticity of demand?

Accepted Answer

A)  whether the good is a necessity 
B)  the proportion of the budget devoted to the good 
C)  the number of substitute goods 
D)  the ease of substituting between the goods 
E)  the cost of producing the good 
A)  whether the good is a necessity 
B)  the proportion of the budget devoted to the good 
C)  the number of substitute goods 
D)  the ease of substituting between the goods 
E)  the cost of producing the good

Question 3

In the accompanying table,assume that the price of ice skates increases from $10 to $20 per pair.Using the midpoint method,what is the price elasticity of demand for ice skates for hockey players?

Accepted Answer

A)  -6.00 
B)  0.67 
C)  0.11 
D)  -0.16 
E)  3.00 
A)  -6.00 
B)  0.67 
C)  0.11 
D)  -0.16 
E)  3.00

Question 4

When the price elasticity of demand is -0.6,then a ________ increase in price leads to a ________ in quantity demanded.

Accepted Answer

A)  10 percent; 6 percent increase 
B)  10 percent; 6 percent decrease 
C)  6 percent; 6 percent increase 
D)  1 percent; 6 percent decrease 
E)  6 percent; 1 percent decrease 
A)  10 percent; 6 percent increase 
B)  10 percent; 6 percent decrease 
C)  6 percent; 6 percent increase 
D)  1 percent; 6 percent decrease 
E)  6 percent; 1 percent decrease

Question 5

When her income falls from $50,000 to $20,000,Arianna increases her monthly purchase of hamburger from 20 pounds to 35 pounds.From the midpoint method,Arianna's income elasticity of demand for hamburgers is

Accepted Answer

A) -1.57. 
B) -0.63. 
C)  0.54. 
D)  -0.85. 
E)  1.57. 
A) -1.57. 
B) -0.63. 
C)  0.54. 
D)  -0.85. 
E)  1.57.

Question 6

Refer to the following graphs to answer the following questions.  
-Which of these graphs represents relatively price elastic demand for a good?

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E

Question 7

In a recession,there are many unemployed workers.Employers find that when the price of labor is $9.00,the quantity supplied is 200 workers.When they lower the wage to $8.50,175 workers are willing to work.
a.Calculate the price elasticity of supply for workers.
b.Over time,technology becomes more effective as a substitute for workers.What happens to the firm's demand for workers? Explain.

Accepted Answer

a.Price elasticity of supply for workers

Question 8

Graph and explain the appropriate shape of the supply or demand curve for Jocelyn's Jammin Jelly Beans when:
a.there is a hurricane that destroys most sugarcane fields.
b.a new candy vendor opens a shop in town.
c.Jocelyn's Jammin Jelly Beans become the hottest item to have at parties.

Accepted Answer

a. @#IMG-DLM& Sugar,a key input into jelly beans,i

Question 9

If the supply of a good is perfectly inelastic,then the price elasticity of supply will equal

Accepted Answer

A)  zero. 
B)  one. 
C)  greater than zero but less than one. 
D)  greater than one but less than infinity. 
E)  negative one. 
A)  zero. 
B)  one. 
C)  greater than zero but less than one. 
D)  greater than one but less than infinity. 
E)  negative one.

Question 10

Assume that the demand for Choco Candy Bites is price elastic.
a.Draw a demand curve for Choco Candy Bites.Label each axis and curve.
b.Use the relatively price elastic demand curve from (a)and draw the entire market graph for Choco Candy Bites.Label the equilibrium price P1 and the equilibrium quantity Q1. If the supply curve for Choco Bites shifts to the left,will there be a relatively large or small change in P and Q? Indicate this on your graph.Label the new equilibrium price P2 and the equilibrium quantity Q2.
c.Compare this change in P and Q to the changes that would result with a relatively price inelastic demand curve.
d.What impact does the price elasticity of demand have on the change in P and Q?

Accepted Answer

a. @#IMG-DLM& b. @#IMG-DLM& There is a relatively large chan

Exam 4: Elasticity

Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Which of the following would NOT affect a good's price elasticity of demand?

In the accompanying table,assume that the price of ice skates increases from $10 to $20 per pair.Using the midpoint method,what is the price elasticity of demand for ice skates for hockey players?

When the price elasticity of demand is -0.6,then a ________ increase in price leads to a ________ in quantity demanded.

When her income falls from $50,000 to $20,000,Arianna increases her monthly purchase of hamburger from 20 pounds to 35 pounds.From the midpoint method,Arianna's income elasticity of demand for hamburgers is

Refer to the following graphs to answer the following questions. -Which of these graphs represents relatively price elastic demand for a good?

Graph and explain the appropriate shape of the supply or demand curve for Jocelyn's Jammin Jelly Beans when: a.there is a hurricane that destroys most sugarcane fields. b.a new candy vendor opens a shop in town. c.Jocelyn's Jammin Jelly Beans become the hottest item to have at parties.

If the supply of a good is perfectly inelastic,then the price elasticity of supply will equal

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Price Controls

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings,interest Rates,and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

When the price elasticity of demand is -0.6,then a increase in price leads to a in quantity demanded.