Exam 6: Elasticity

The price of gasoline rises 5% and the quantity of gasoline purchased falls 1%.The price elasticity of demand is equal to ________ and demand is described as _. A.0.2; inelastic B.5; inelastic C.0.2; elastic D.5; elastic

Figure: The Demand for Shirts (Figure: The Demand for Shirts) Look at the figure.At a price of $30, total revenue is , and at a price of $10, total revenue is _. A.$9,000; $12,000 B.$3,000; $5,000 C.$9,000; $5,000 D.$5,000; $9,000

If funeral homes discover that the price elasticity of demand for caskets equals 0.55, funeral homes should increase prices to increase revenue.

Suppose the price of university sweatshirts increases from $10 to $20 and the quantity supplied increases from 20 to 30.The price elasticity of supply, using the midpoint formula, is:

The price elasticity of demand for gasoline in the short run has been estimated to be 0.4.If a war in the Middle East causes the price of oil (from which gasoline is made) to increase, how will that affect total revenue from gasoline in the short run, all other things unchanged? A.Quantity demanded will stay the same; total revenue will fall. B.Quantity demanded will decrease; total revenue will rise. C.Total revenue will remain unchanged. D.Demand will not change; total revenue will rise.

(Table: Johnson's Income and Expenditures) Look at the table Johnson's Income and Expenditures.For Johnson, pizzas are: A.an inferior good. B.a positive good. C.a neutral good. D.a normal good.

If a good is very inexpensive, but it is a necessity, you would predict that demand for the good is: A.is price-elastic. B.is price-inelastic. C.is price unit-elastic. D.has indeterminable price elasticity.

The pair of items that is likely to have the largest positive cross-price elasticity of demand is: A.coffee and tea. B.skis and ski boots. C.pizza and pepperoni. D.milk and cookies.

Suppose the price of barley increases by 16.53%.If breweries buy 3.28% less barley after the price increase, the total revenue for barley producers will because the ________ effect is greater than the effect. A.decrease; quantity; price B.increase; price; quantity C.not change; quantity; price D.increase; quantity; price

If the price of a good increases by 15% and the quantity demanded falls by 20%, demand is: A.price-elastic. B.price-inelastic. C.price unit-elastic. D.normal.

Figure: The Demand for Shirts (Figure: The Demand for Shirts) Look at the figure The Demand for Shirts.Using the midpoint method, the price elasticity of demand for the segment AB is: A.less than the price elasticity of demand for the segment BC. B.less than the price elasticity of demand for the segment EF. C.zero. D.greater than the price elasticity of demand for the segment BC.

If someone did not regard health care as very important, often using home remedies and other substitutes, compared to other people, his or her demand curve for health care would most likely be over the relevant range of prices for health care. A.more price-elastic B.more price-inelastic C.horizontal D.vertical

Each month Jacquelyn spends exactly $50 on ice cream regardless of the price of each container.Jacquelyn's price elasticity of demand for ice cream is:

Other things being equal, the price elasticity of demand for a product will be lower: A.if there are many substitutes available. B.if it is a large part of the consumer's budget. C.in the long run as compared to the short run. D.if there are few or no substitutes available.

For which of the following is the cross-price elasticity of demand most likely a large positive number? A.hockey pucks and hockey B.sticks DVDs and milk C.french fries and onion rings D.all of these, because the cross-price elasticity is always a positive number

Assume the price elasticity of demand for tobacco is 0.5 and the income elasticity of demand for tobacco is 0.4.Then: A.an increase in the price of tobacco will decrease total revenue from sales of tobacco. B.a 20% increase in the price of tobacco will decrease the quantity demanded of tobacco by 8%. C.tobacco is an inferior good. D.a 50% increase in income will increase the quantity demanded of tobacco by 20%.

Jessica's income increased by 10% this year.In the same year, Jessica's quantity demanded of milk increased by 10% and her quantity demanded for bread increased by 5%.This means that for Jessica: A.both milk and bread are inferior goods. B.both milk and bread are normal goods. C.milk is an inferior good, but bread is a normal good. D.milk is a normal good, but bread is an inferior good.

When the price of pencils decreases from $3 to $1, the quantity demanded increases from 100 to 200 pencils.Using the midpoint method, the price elasticity of demand equals: A.1/6. B.1/2. C.2/3. D.3/2.

In the short run, the price elasticity of supply for foods low in carbohydrates is lower than it will be in the long run because: A.in the short run, inputs are more available to produce these foods than in the long run. B.in the short run, food producers do not have as much time to respond to changes in demand. C.in the short run, prices tend to stay constant. D.in the long run, the price elasticity of supply tends to be perfectly inelastic.

Goods are ________ when the cross-price elasticity of demand is positive and ________ when the cross-price elasticity of demand is negative. A.substitutes; complements B.complements; substitutes C.elastic; inelastic D.inelastic; elastic