Exam 6: Elasticity

The price elasticity of demand for skiing lessons in New Hampshire is over 1.00.This means that the demand is in New Hampshire.

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded does not change, then the price elasticity of demand (using the midpoint method) is:

If an increase in income leads to a decrease in the demand for a good, then the good is said to be: A.normal. B.a luxury. C.inferior. D.a staple or necessity.

If the income elasticity of demand for a good is _______, the good is said to be _. A.positive; inferior good B.negative; substitute good C.positive; normal good D.positive; positive good

Which of the following would be most likely to have a vertical supply curve?

Eric's income increased from $40,000 to $50,000 per year.Eric's consumption of tickets to pro football games increased from two to four per year.Using the midpoint formula, his income elasticity of demand for pro football game tickets is equal to , and football game tickets are goods. A.-1/3; inferior B.+2/3; normal C.-3; inferior D.+3; normal

Suppose the price elasticity of demand for blueberries is 1.5.If climate change destroys one-fourth of the nation's blueberry crop (and thus reduces supply), how will that affect total revenue, all other things unchanged? A.Total revenue will rise. B.Total revenue will fall. C.Total revenue will remain unchanged. D.Not enough information is given to answer the question.

If the price elasticity of supply is greater than 1, then: A.supply is price-elastic. B.supply is price-inelastic. C.supply is price unit-elastic. D.the quantity supplied is relatively unresponsive to price changes.

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 CD is:

If the price of a good increases by 20% and the quantity demanded changes by 15%, then the price elasticity of demand is equal to: A.0.75. B.approximately 0.33. C.approximately 1.33. D.1.

If the price of burritos increases from $4 to $6 and customers decrease their consumption from 20 to 10 burritos, what is the price elasticity of demand (using the midpoint method)? A.5/3 B.2/3 C.3 D.2

If your purchases of shoes increase from 9 pairs per year to 11 pairs per year when your income increases from $19,000 to $21,000 a year, other things equal, for you, shoes are considered: A.a normal good. B.an inferior good. C.a complementary good. D.a substitute good.

Sarah has been told she has only one week to finish some pottery for a show.Sarah has exhausted her supply of clay and considers new clay absolutely necessary for finishing her products.For Sarah, the price elasticity of demand for new clay is elastic.

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year, other things equal, then, for you, shoes are considered: A.a normal good. B.an inferior good. C.a complementary good. D.a substitute good.

If demand is elastic, then: A.the price effect dominates the quantity effect, and a fall in the price will cause total revenue to rise. B.the price effect dominates the quantity effect, and an increase in the price will cause total revenue to rise. C.the quantity effect dominates the price effect, and an increase in the price causes total revenue to rise. D.the quantity effect dominates the price effect, and a decrease in the price causes total revenue to rise.

If the University of Michigan increases the price of football tickets, this will result in increasing revenues if demand: A.is price-inelastic. B.is price-elastic. C.has price elasticity equal to 1. D.is perfectly elastic.

A hotel has a capacity of 100 rooms.Which of the following statements best describes the elasticity of supply for rooms at this hotel? A.The supply is elastic at quantities above 100 rooms but inelastic at quantities below 100 rooms. B.The elasticity of supply is equal to 1 in the short run but infinitely elastic in the long run. C.The elasticity of supply is zero in the short run because the short-run supply curve is vertical. D.The supply is infinitely elastic in the short run but perfectly inelastic in the long run.

Which of the following pairs of goods are most likely to have a cross-price elasticity of demand that is greater than zero? A.shoes and shoelaces B.apples and bananas C.pizza and bread D.sticks gasoline and cars

The percentage change in quantity demanded of one good or service divided by the percentage change in the price of a related good or service is the: A.price elasticity of demand. B.quantity elasticity of C.demand. D.income elasticity of demand. E.cross-price elasticity of demand.

Suppose the price of gasoline increases 10% and quantity of gasoline demanded in Orlando drops 5% per day.Demand for gasoline in Orlando is: A.price elastic. B.price inelastic. C.price unit-elastic. D.perfectly price inelastic.