Question 1

Explain four factors that affect the price elasticity of demand for a product.

Accepted Answer

The answer of Explain four factors that affect the price...

Question 2

Lyft cuts the price of a ride in New York City by 10%. Thereafter, the quantity of rides demanded rises by 25%. What is the absolute value of the price elasticity of demand for Lyft rides?

Accepted Answer

A) 0.4 
B) -0.4 
C) 2.5 
D) -2.5 
A) 0.4 
B) -0.4 
C) 2.5 
D) -2.5

Question 3

(Table: Market for Mexican Take-Out) When income changes from $1,000 to $1,400 per month, the income elasticity of demand for Mexican take-out meals, computed using the midpoint method at a price of $14 per meal, is: $$\begin{array}{l}
\text { Table: Market for Mexican Take-Out }\
\begin{array} { | l | l | l | } 
\hline \text { Price (per meal) } & \begin{array} { l } 
\text { Quantity of Meals Demanded } \
\text { (income } = \$ 1,000 \text { per month) }
\end{array} & \begin{array} { l } 
\text { Quantity of Meals Demanded } \
\text { (income } = \$ 1,400 \text { per month) }
\end{array} \
\hline 20 & 3 & 7 \
\hline 18 & 4 & 8 \
\hline 16 & 5 & 9 \
\hline 14 & 6 & 10 \
\hline 12 & 7 & 11 \
\hline 10 & 8 & 12 \
\hline 8 & 9 & 13 \
\hline 6 & 10 & 14 \
\hline
\end{array}
\end{array}$$

Accepted Answer

A) -1. 
B) 1. 
C) 1.25. 
D) 1.5. 
A) -1. 
B) 1. 
C) 1.25. 
D) 1.5.

Question 4

If quantity demanded responds substantially to a relatively small change in price, demand is:

Accepted Answer

A) price-elastic. 
B) price-inelastic. 
C) positively sloped. 
D) insensitive to changes in price. 
A) price-elastic. 
B) price-inelastic. 
C) positively sloped. 
D) insensitive to changes in price.

Question 5

(Figure: Demand for High End Cell Phones) Use Figure: The Demand for High End Cell Phones. Total revenue at point S equals the:

Accepted Answer

A) distance 0P. 
B) distance MS. 
C) area 0TUM. 
D) area 0PSM. 
A) distance 0P. 
B) distance MS. 
C) area 0TUM. 
D) area 0PSM.

Question 6

Arnie recently purchased the Mill Town Square Mall in Philadelphia. Attempting to explain the elasticity of supply to shop owners in the mall, he tells them that the price elasticity of supply measures:

Accepted Answer

A) the responsiveness of supply to changes in technology. 
B) the responsiveness of supply to changes in input prices. 
C) the responsiveness of quantity supplied to changes in price. 
D) the response of supply to changes in technology and changes in price. 
A) the responsiveness of supply to changes in technology. 
B) the responsiveness of supply to changes in input prices. 
C) the responsiveness of quantity supplied to changes in price. 
D) the response of supply to changes in technology and changes in price.

Question 7

Lyft cuts the price of a ride in New York City by 20%. Thereafter, the quantity of rides demanded rises by 25%. What is the absolute value of the price elasticity of demand for Lyft rides?

Accepted Answer

A) 0.8 
B) -0.8 
C) 1.25 
D) -1.25 
A) 0.8 
B) -0.8 
C) 1.25 
D) -1.25

Question 8

Uber increases the price of a ride in New York City by 10%, and the quantity of rides demanded falls by 30%. The absolute value of the price elasticity of demand for Uber rides is _____, and the price elasticity of demand is _____.

Accepted Answer

A) 0.33; elastic 
B) 0.33; inelastic 
C) 3; elastic 
D) 3; inelastic 
A) 0.33; elastic 
B) 0.33; inelastic 
C) 3; elastic 
D) 3; inelastic

Question 9

The price of product C rises by 10%. As a result, the quantity demanded of product D rises by 20%. The cross-price elasticity of demand between product C and product D is _____, and they are _____.

Accepted Answer

A) -2; substitutes 
B) 0.5; substitutes 
C) 2; substitutes 
D) 1.5; complements 
A) -2; substitutes 
B) 0.5; substitutes 
C) 2; substitutes 
D) 1.5; complements

Question 10

Rank these absolute values of price elasticity of demand from most inelastic demand to most elastic demand - 0.25, 2.5, 1.3, 0.12, 1.

Accepted Answer

The answer of Rank these absolute values of price elasticity...

Question 11

Uber cuts the price of a ride in Los Angeles by 15%. Thereafter, the quantity of rides demanded rises by 45%. What is the absolute value of the price elasticity of demand for Uber rides?

Accepted Answer

A) 0.33 
B) -0.33 
C) 3 
D) -3 
A) 0.33 
B) -0.33 
C) 3 
D) -3

Question 12

(Table: Martinez Family Household Income and Expenditures') Use Table: Martinez Family Household Income and Expenditures. The Martinez's income elasticity of demand for hamburgers is:

Accepted Answer

A) greater than 1. 
B) 1. 
C) between 0 and 1. 
D) 0. 
A) greater than 1. 
B) 1. 
C) between 0 and 1. 
D) 0.

Question 13

Demand for a particular fast-food chain inside an airport is less elastic than outside of the airport because:

Accepted Answer

A) necessities have less elastic demand. 
B) fewer choices means more inelastic demand. 
C) specific brands tend to have more elastic demand than categories of goods. 
D) consumer search makes demand more elastic. 
A) necessities have less elastic demand. 
B) fewer choices means more inelastic demand. 
C) specific brands tend to have more elastic demand than categories of goods. 
D) consumer search makes demand more elastic.

Question 14

When price rises, quantity demanded falls. The price elasticity of demand measures:

Accepted Answer

A) the percentage fall in price. 
B) how much the equilibrium price rises. 
C) the responsiveness of an income change to a price change. 
D) the responsiveness of a change in quantity demanded to a price change. 
A) the percentage fall in price. 
B) how much the equilibrium price rises. 
C) the responsiveness of an income change to a price change. 
D) the responsiveness of a change in quantity demanded to a price change.

Question 15

The price of chicken breast rises from $3.00 to $3.60 per pound. In response to the price change, the demand for chicken breast falls by 25%. The absolute value of the price elasticity of demand for chicken breast is _____, and the price elasticity of demand is _____.

Accepted Answer

A) 0.8; elastic 
B) 0.8; inelastic 
C) 1.25; elastic 
D) 1.25; inelastic 
A) 0.8; elastic 
B) 0.8; inelastic 
C) 1.25; elastic 
D) 1.25; inelastic

Question 16

It is very easy for Evelyn to find inexpensive inputs for her business. Evelyn's supply is therefore likely to be:

Accepted Answer

A) elastic. 
B) inelastic. 
C) unit-elastic. 
D) perfectly elastic. 
A) elastic. 
B) inelastic. 
C) unit-elastic. 
D) perfectly elastic.

Question 17

The price of product A is cut by 30%. As a result, the quantity demanded of product B rises by 40%. The cross-price elasticity of demand between product A and product B is _____, and they are _____.

Accepted Answer

A) -0.75; substitutes 
B) -1.25; complements 
C) -1.33; complements 
D) 1.25; complements 
A) -0.75; substitutes 
B) -1.25; complements 
C) -1.33; complements 
D) 1.25; complements

Question 18

The price of turkey breast rises from $3.00 per pound to $3.60 per pound. In response to this price change, the quantity demanded for turkey breast falls by 40%. What is the absolute value of the price elasticity of demand for turkey breast?

Accepted Answer

A) 0.5 
B) -0.5 
C) 2 
D) -2 
A) 0.5 
B) -0.5 
C) 2 
D) -2

Question 19

(Table: Market for Mexican Take-Out) Use Figure: Market for Mexican Take-Out. If income changes from $1,000 to $1,400 per month, the income elasticity of demand, computed using the midpoint method at a price of $10 per Mexican take-out meal, is: $\text { Table: Market for Mexican Take-Out }$
$\begin{array} { | l | l | l | } 
\hline \text { Price (per meal) } & \begin{array} { l } 
\text { Quantity of Meals Demanded } \
\text { (income } = \$ 1,000 \text { per month) }
\end{array} & \begin{array} { l } 
\text { Quantity of Meals Demanded } \
\text { (income } \$ 1,400 \text { per month) }
\end{array} \
\hline 20 & 3 & 7 \
\hline 18 & 4 & 8 \
\hline 16 & 5 & 9 \
\hline 14 & 6 & 10 \
\hline 12 & 7 & 11 \
\hline 10 & 8 & 12 \
\hline 8 & 9 & 13 \
\hline 6 & 10 & 14 \
\hline
\end{array}$

Accepted Answer

A) 1.2. 
B) -1.2. 
C) 0.825. 
D) 0.40. 
A) 1.2. 
B) -1.2. 
C) 0.825. 
D) 0.40.

Question 20

Jonathan's income falls by 15%. He decides to cut down his purchases of high-end restaurant meals by 20%. His income elasticity of demand for high-end restaurant meals is:

Accepted Answer

A) 1.33. 
B) -0.75. 
C) 0.75. 
D) -1.33. 
A) 1.33. 
B) -0.75. 
C) 0.75. 
D) -1.33.

Exam 5: Elasticity: Measuring Responsiveness

Explain four factors that affect the price elasticity of demand for a product.

Lyft cuts the price of a ride in New York City by 10%. Thereafter, the quantity of rides demanded rises by 25%. What is the absolute value of the price elasticity of demand for Lyft rides?

If quantity demanded responds substantially to a relatively small change in price, demand is:

(Figure: Demand for High End Cell Phones) Use Figure: The Demand for High End Cell Phones. Total revenue at point S equals the:

Arnie recently purchased the Mill Town Square Mall in Philadelphia. Attempting to explain the elasticity of supply to shop owners in the mall, he tells them that the price elasticity of supply measures:

Lyft cuts the price of a ride in New York City by 20%. Thereafter, the quantity of rides demanded rises by 25%. What is the absolute value of the price elasticity of demand for Lyft rides?

Uber increases the price of a ride in New York City by 10%, and the quantity of rides demanded falls by 30%. The absolute value of the price elasticity of demand for Uber rides is _____, and the price elasticity of demand is _____.

The price of product C rises by 10%. As a result, the quantity demanded of product D rises by 20%. The cross-price elasticity of demand between product C and product D is _____, and they are _____.

Rank these absolute values of price elasticity of demand from most inelastic demand to most elastic demand - 0.25, 2.5, 1.3, 0.12, 1.

Uber cuts the price of a ride in Los Angeles by 15%. Thereafter, the quantity of rides demanded rises by 45%. What is the absolute value of the price elasticity of demand for Uber rides?

(Table: Martinez Family Household Income and Expenditures') Use Table: Martinez Family Household Income and Expenditures. The Martinez's income elasticity of demand for hamburgers is:

Demand for a particular fast-food chain inside an airport is less elastic than outside of the airport because:

When price rises, quantity demanded falls. The price elasticity of demand measures:

The price of chicken breast rises from $3.00 to $3.60 per pound. In response to the price change, the demand for chicken breast falls by 25%. The absolute value of the price elasticity of demand for chicken breast is _____, and the price elasticity of demand is _____.

It is very easy for Evelyn to find inexpensive inputs for her business. Evelyn's supply is therefore likely to be:

The price of product A is cut by 30%. As a result, the quantity demanded of product B rises by 40%. The cross-price elasticity of demand between product A and product B is _____, and they are _____.

The price of turkey breast rises from $3.00 per pound to $3.60 per pound. In response to this price change, the quantity demanded for turkey breast falls by 40%. What is the absolute value of the price elasticity of demand for turkey breast?

Jonathan's income falls by 15%. He decides to cut down his purchases of high-end restaurant meals by 20%. His income elasticity of demand for high-end restaurant meals is:

The Core Principles of Economics

Demand: Thinking Like a Buyer

Supply: Thinking Like a Seller

Equilibrium: Where Supply Meets Demand

When Governments Intervene in Markets

Welfare and Efficiency

Gains From Trade

International Trade

Externalities and Public Goods

Labor Demand and Supply

Wages, Workers, and Management

Inequality, Social Insurance, and Redistribution

Market Structure and Market Power

Entry, Exit, and Long-Run Profitability

Business Strategy

Sophisticated Pricing Strategies

Game Theory and Strategic Choices

Decisions Involving Uncertainty

Decisions With Private Information

Sizing up the Economy Using Gdp

Economic Growth

Unemployment

Inflation and Money

Consumption and Saving

Investment

The Financial Sector

International Finance and the Exchange Rate

Business Cycles

IS-MP Analysis: Interest Rates and Output

Phillips Curve

The Fed Model: Linking Interest Rates, Output, and Inflation

Aggregate Demand and Aggregate Supply

Monetary Policy

Government Spending, Taxes, and Fiscal Policy

Appendix: Aggregate Expenditure and the Multiplier

Filters

Uber increases the price of a ride in New York City by 10%, and the quantity of rides demanded falls by 30%. The absolute value of the price elasticity of demand for Uber rides is _, and the price elasticity of demand is _.

The price of product C rises by 10%. As a result, the quantity demanded of product D rises by 20%. The cross-price elasticity of demand between product C and product D is _, and they are _.

The price of chicken breast rises from $3.00 to $3.60 per pound. In response to the price change, the demand for chicken breast falls by 25%. The absolute value of the price elasticity of demand for chicken breast is _, and the price elasticity of demand is _.

The price of product A is cut by 30%. As a result, the quantity demanded of product B rises by 40%. The cross-price elasticity of demand between product A and product B is _, and they are _.