Exam 3: Demand Elasticities

Referring to the previous question,as a result of the consumer's adjustment to the change in the price of Y,assuming Y is a normal good and X and Y are complements,it is reasonable to expect that the amount of Y consumed will ________,and the amount of X consumed will ________:

The results of studies of the tobacco industry suggests that college and secondary school students who smoke are much more likely to respond to a change in price than adults who smoke.

In the case of a linear demand function,the marginal revenue function is twice as steep as the demand function.

Assume that,over time,engineers develop new residential furnaces that can run on different types of fuels,e.g.,natural gas,electricity,propane,and fuel oil,simply by flipping a switch on the furnace.How would this technological change affect the price elasticity of demand for natural gas? Why?

Assuming the inverse demand function for good Z can be written as P = 90 - 3Q,when P = 20,the point price elasticity of demand is equal to (approximately):

Consider an indifference curve drawn for movies and pizzas.Which of the following statements about this indifference curve is false?

If the cross-price elasticity of demand between two goods is positive,we can assume that the two goods in question are:

Which of the following is not considered to be a determinant of the price elasticity of demand for a particular good?

Which of the following statements is correct?

The last time the U.S.Post Office raised its prices for mail service critics of the rate increase argued that the Post Office's revenues would actually decline as a result of the price increase.It can be concluded that:

A car dealer wants to get rid of the stock of last year's model.Assume that the dealer knows from past experience that the price elasticity of demand for cars is unitary (= 1).If the price of the cars is currently $20,000 and the dealer wants to increase the quantity demanded from 30 units to 50 units,what must the new price be if the dealer is to sell the 20 additional cars?

Calculate the arc price elasticity of demand for wheat in the two situations below: The Wheat Market Farmer Brown's Wheat Old price; $3.40/bu Old price; $3.40/bu Old quantity; 2.5 billion bu Old quantity; 28,000 bu New price; $3.20/bu New price; $3.20/bu New quantity; 2.525 billion bu New quantity; 35,000 bu Can you account for the difference in elasticities?

In which of the following cases would the price elasticity of demand be expected to increase?

Assume that when the price of good X is $12,quantity demanded is 32.When price is decreased to $9,quantity demanded increases to 45.Based on this information,over the range in question demand is elastic.

The price elasticity of demand for pleasure travel (-1.9)and business travel (-0.8)suggests that air travel for pleasure is a luxury and air travel for business is a necessity.

At the point on the demand curve at which marginal revenue = 0,the absolute value of the coefficient of the price elasticity of demand is:

The "marginal rate of substitution" between two goods is measured by:

Which of the following statements is true when the consumer is in utility-maximizing equilibrium?

Marginal revenue equals 0 when:

Based on empirical evidence,the "farm problem" that has confronted U.S.policymakers for many years is attributable,in large part,to the relatively inelastic demand for many agricultural products.