Exam 6: Elasticity

Figure: The Demand Curve (Figure: The Demand Curve) Look again at the figure The Demand Curve.Using the midpoint method, the price elasticity of demand between $6 and $7 is approximately:

The price elasticity of demand for fresh tomatoes has been estimated to be 2.22.If a new insecticide and fertilizer treatment yields a 20% increase in the nation's fresh tomato crop, how will that affect total revenue from fresh tomatoes, all other things unchanged? A.Total revenue will remain unchanged. B.Total revenue will fall. C.Total revenue will rise. D.Not enough information is given to answer the question.

Figure: The Demand for Shirts (Figure: The Demand for Shirts) Look at the figure.The Demand for Shirts.At a price of $40, total revenue is: A.$40. B.$200. C.$4,000. D.$8,000.

When Joe's income is $100 per week, he spends $20 per week on pizza.When his income rises to $110 per week, he spends $25 per week on pizza.If the price of pizza remains constant, this information implies that for Joe: A.pizza is a normal good and a luxury. B.pizza is a normal good and a necessity. C.pizza is an inferior good, since his expenditure rose by less than the increase in income. D.demand for pizza is price-elastic.

When the price of chocolate-covered peanuts increases from $1.55 to $2.00, the quantity demanded decreases from 220 to 160.In this price range, the demand for chocolate covered peanuts is _________ and total revenue will when the price increases. A.elastic; increase B.elastic; decrease C.inelastic; increase D.inelastic; decrease

If your income increases and your consumption of bagels increases, other things equal, bagels are considered: A.a negative good. B.a positive good. C.an inferior good. D.a normal good.

Suppose the price elasticity of demand for fishing lures equals 1.5 in South Carolina and 0.63 in Alabama.To increase revenue, fishing lure manufacturers should: A.lower prices in each state. B.raise prices in each state. C.lower prices in South Carolina and raise prices in Alabama. D.leave prices unchanged in South Carolina and raise prices in Alabama.

If a good is a necessity with few substitutes, then demand will tend to:

Suppose the price of e-books is initially $20 but then decreases to $15.The absolute value of the percentage change in price (using the midpoint method) is: A.28%. B.10%. C.5%. D.15%.

If I told you that the income elasticity for hybrid cars was positive, you would know that:

If your purchases of shoes increase from 9 pairs per year to 11 pairs per year when the price of shirts increases from $8 to $12, for you, shoes and shirts are considered: A.inferior goods. B.luxury goods. C.substitute goods. D.complementary goods.

Goods A and B have a positive cross-price elasticity of demand.This means goods A and B are: A.normal goods. B.substitutes. C.complements. D.inferior goods.

If the price of chocolate-covered peanuts decreases from $1.15 to $0.90 and the quantity demanded does not change, then the price elasticity of demand (using the midpoint method) is:

After you graduate from college, you open a business selling computers.Many other businesses in your city sell similar computers.Based on this information, the price elasticity of demand for the computers that your business sells will be:

Figure: Demand Curves (Figure: Demand Curves) Look at the figure Demand Curves.Which graph shows a perfectly elastic demand curve?

A major state university in the South recently raised tuition by 12%.An economics professor at this university asked his students, "How many of you will transfer to another university because of the increase in tuition?" One student out of about 300 said that he or she would transfer.Based on this information, the price elasticity of demand for education at this university is: A.1. B.highly elastic. C.highly inelastic. D.0.

Table: Price Elasticity (Table: Price Elasticity) Look again at the table Price Elasticity.What is the price elasticity of demand between $1.75 and $1.50?

Figure: The Demand Curve for Bridge Crossings (Figure: The Demand Curve for Bridge Crossings) Look again at the figure The Demand Curve for Bridge Crossings.Demand is price between $0.90 and $1.10, since total revenue ________ when the price _. A.elastic; increases; decreases B.inelastic; stays the same; decreases C.unit-elastic; stays the same; increases D.inelastic; increases; increases

The director of River City Public Transport recently stated, "The last seven times we increased bus fares, revenues dropped." This remark suggests the demand for bus service is elastic.

The cross-price elasticity of demand for Coke with respect to the price of Pepsi has been estimated to be 0.61.If the price of Pepsi falls by 10% in a period, how will that affect the demand for Coke in that period, all other things unchanged? A.The demand for Coke will decrease but by less than 6.1%. B.The demand for Coke will decrease by 6.1%. C.The demand for Coke will not change because many people prefer Coke to Pepsi. D.The demand for Coke will rise.