Question 1

The income elasticity of demand measures

Accepted Answer

A) the responsiveness of quantity demanded to changes in income. 
B) how a consumer's purchasing power is affected by a change in the price of a product. 
C) the percentage change in the price of a product divided by the percentage change in consumer income. 
D) the income effect of a change in price. 
A) the responsiveness of quantity demanded to changes in income. 
B) how a consumer's purchasing power is affected by a change in the price of a product. 
C) the percentage change in the price of a product divided by the percentage change in consumer income. 
D) the income effect of a change in price.

Question 2

Suppose the cross-price elasticity of demand between grapefruit juice and orange juice is approximately 6.What does this mean?

Accepted Answer

A) A 1 percent decrease in the price of grapefruit juice leads to a 6 percent increase in orange juice consumption. 
B) A 6 percent increase in the price of grapefruit juice leads to a 1 percent increase in orange juice consumption. 
C) If the price of grapefruit juice rises by $1, 6 more cartons of orange juice will be purchased. 
D) The demand for orange juice is 6 times greater than the demand for grapefruit juice. 
A) A 1 percent decrease in the price of grapefruit juice leads to a 6 percent increase in orange juice consumption. 
B) A 6 percent increase in the price of grapefruit juice leads to a 1 percent increase in orange juice consumption. 
C) If the price of grapefruit juice rises by $1, 6 more cartons of orange juice will be purchased. 
D) The demand for orange juice is 6 times greater than the demand for grapefruit juice.

Question 3

The price elasticity of supply is calculated as the change in supply divided by the change in price.

Accepted Answer

A) True 
 B)False

Question 4

Table 6-8
   
The town of Bloomfield is well known for its basketball team. The price of basketball game tickets is determined by market forces. Table 6-8 above shows the demand and supply schedules for basketball games tickets.
-Refer to Table 6-8.What is the numerical value of the price elasticity of supply?

Accepted Answer

A) 1 
B) greater than 0 but less than 1 
C) 0 
D) greater than 1 
A) 1 
B) greater than 0 but less than 1 
C) 0 
D) greater than 1

Question 5

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 percent?

Accepted Answer

A) The quantity demanded of the related good rises by 3.4 percent. 
B) The quantity demanded of the related good falls by 34 percent. 
C) The quantity demanded of the related good rises by 34 percent. 
D) The quantity demanded of the related good falls by 3.4 percent. 
A) The quantity demanded of the related good rises by 3.4 percent. 
B) The quantity demanded of the related good falls by 34 percent. 
C) The quantity demanded of the related good rises by 34 percent. 
D) The quantity demanded of the related good falls by 3.4 percent.

Question 6

For a given demand curve, will there be a greater loss of economic efficiency from a binding price floor when supply is elastic or inelastic? Illustrate your answer with a demand and supply graph.In your graph you must show two supply curves, one elastic and the other inelastic.

Accepted Answer

@#IMG-DLM& See the figure above.S_A is the elastic s

Question 7

In recent years, the prices of new domestically produced cars have been falling.Suppose consumers respond by reducing their demand for used cars and mass transport services such as bus travel.This information suggests that the cross-price elasticity between new cars and used cars, and the cross-price elasticity between new cars and bus travel, are negative.

Accepted Answer

A) True 
 B)False

Question 8

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula, what is the approximate change in the quantity of teenage labor supplied?

Accepted Answer

A) 7.3 percent 
B) 14.4 percent 
C) 25.5 percent 
D) There is insufficient information to answer the question. 
A) 7.3 percent 
B) 14.4 percent 
C) 25.5 percent 
D) There is insufficient information to answer the question.

Question 9

Assume that when the price of cantaloupes is $2.50 the demand for cantaloupes is unit-elastic, and that the demand curve for cantaloupes is linear and downward sloping.If firms lower the price of cantaloupes to $2.00 which of the following statements can be made regarding the price elasticity of demand for cantaloupes?

Accepted Answer

A) The demand for cantaloupes at $2.00 must be inelastic. 
B) We cannot determine whether the demand for cantaloupes is elastic or inelastic without knowing what the quantity demanded is at each price. 
C) The demand for cantaloupes at $2.00 must be elastic. 
D) The demand for cantaloupes at $2.00 must be unit elastic. 
A) The demand for cantaloupes at $2.00 must be inelastic. 
B) We cannot determine whether the demand for cantaloupes is elastic or inelastic without knowing what the quantity demanded is at each price. 
C) The demand for cantaloupes at $2.00 must be elastic. 
D) The demand for cantaloupes at $2.00 must be unit elastic.

Question 10

If the cross-price elasticity of demand for goods A and B is zero, this means the two goods are unrelated.

Accepted Answer

A) True 
 B)False

Question 11

In 2016, Philadelphia imposed a tax of 1.5 cents per ounce on sweetened beverages, and PepsiCo indicated that its sales in Philadelphia fell by 40 percent after the tax took effect.If the price of PepsiCo's sweetened beverages in Philadelphia increased by 32 percent following the implementation of the tax, then demand for sweetened beverages in Philadelphia would be

Accepted Answer

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

Question 12

Economists use the concept of ________ to measure how one economic variable, such as quantity, responds to a change in another economic variable, such as price.

Accepted Answer

A) slope 
B) efficiency 
C) relativity 
D) elasticity 
A) slope 
B) efficiency 
C) relativity 
D) elasticity

Question 13

Jenna runs a small boutique in Capitola.She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more.On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers?

Accepted Answer

A) It is elastic. 
B) It is perfectly elastic. 
C) It is perfectly inelastic. 
D) The price elasticity coefficient is 0. 
A) It is elastic. 
B) It is perfectly elastic. 
C) It is perfectly inelastic. 
D) The price elasticity coefficient is 0.

Question 14

When the price of Starbucks coffee increased by 8 percent, the quantity demanded of Peet's coffee increased by 10 percent.Calculate the cross-price elasticity of demand between Starbucks coffee and Peet's coffee.What is the relationship between the two products?

Accepted Answer

The cross price elas

Question 15

Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes in general.

Accepted Answer

A) less than 
B) equal to 
C) twice as great as 
D) greater than 
A) less than 
B) equal to 
C) twice as great as 
D) greater than

Question 16

Figure 6-1
  
-Refer to Figure 6-1.The demand curve on which elasticity changes at every point is given in

Accepted Answer

A) Panel A. 
B) Panel B. 
C) Panel C. 
D) none of the above graphs. 
A) Panel A. 
B) Panel B. 
C) Panel C. 
D) none of the above graphs.

Question 17

If a firm raised its price and discovered that its total revenue fell, then the demand for its product is

Accepted Answer

A) perfectly inelastic. 
B) relatively inelastic. 
C) perfectly elastic. 
D) relatively elastic. 
A) perfectly inelastic. 
B) relatively inelastic. 
C) perfectly elastic. 
D) relatively elastic.

Question 18

A convenience store owner in Philadelphia was worried that the implementation of the 1.5 cents per ounce tax on sweetened beverages would cause the quantity demanded to fall by so much that he would be in a worse situation if he passed the tax on to customers by raising prices than if he did not raise prices.If raising the price of sweetened beverages would cause the owner to receive less total revenue from the sale of sweetened beverages, the demand for sweetened beverages is

Accepted Answer

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

Question 19

Figure 6-10
  
-Refer to Figure 6-10.A perfectly inelastic supply curve is shown in

Accepted Answer

A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D. 
A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D.

Question 20

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50, the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03.These elasticities mean that beer and spirits are ________, and spirits and wine are ________.

Accepted Answer

A) complements; luxuries 
B) normal goods; luxuries 
C) complements; substitutes 
D) substitutes; luxuries 
A) complements; luxuries 
B) normal goods; luxuries 
C) complements; substitutes 
D) substitutes; luxuries

The income elasticity of demand measures

Suppose the cross-price elasticity of demand between grapefruit juice and orange juice is approximately 6.What does this mean?

The price elasticity of supply is calculated as the change in supply divided by the change in price.

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 percent?

For a given demand curve, will there be a greater loss of economic efficiency from a binding price floor when supply is elastic or inelastic? Illustrate your answer with a demand and supply graph.In your graph you must show two supply curves, one elastic and the other inelastic.

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula, what is the approximate change in the quantity of teenage labor supplied?

If the cross-price elasticity of demand for goods A and B is zero, this means the two goods are unrelated.

Economists use the concept of ________ to measure how one economic variable, such as quantity, responds to a change in another economic variable, such as price.

Jenna runs a small boutique in Capitola.She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more.On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers?

When the price of Starbucks coffee increased by 8 percent, the quantity demanded of Peet's coffee increased by 10 percent.Calculate the cross-price elasticity of demand between Starbucks coffee and Peet's coffee.What is the relationship between the two products?

Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes in general.

Figure 6-1 -Refer to Figure 6-1.The demand curve on which elasticity changes at every point is given in

If a firm raised its price and discovered that its total revenue fell, then the demand for its product is

Figure 6-10 -Refer to Figure 6-10.A perfectly inelastic supply curve is shown in

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50, the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03.These elasticities mean that beer and spirits are , and spirits and wine are .

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 6: Elasticity: the Responsiveness of Demand and Supply

The income elasticity of demand measures

Suppose the cross-price elasticity of demand between grapefruit juice and orange juice is approximately 6.What does this mean?

The price elasticity of supply is calculated as the change in supply divided by the change in price.

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 percent?

For a given demand curve, will there be a greater loss of economic efficiency from a binding price floor when supply is elastic or inelastic? Illustrate your answer with a demand and supply graph.In your graph you must show two supply curves, one elastic and the other inelastic.

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula, what is the approximate change in the quantity of teenage labor supplied?

If the cross-price elasticity of demand for goods A and B is zero, this means the two goods are unrelated.

Economists use the concept of ________ to measure how one economic variable, such as quantity, responds to a change in another economic variable, such as price.

Jenna runs a small boutique in Capitola.She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more.On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers?

When the price of Starbucks coffee increased by 8 percent, the quantity demanded of Peet's coffee increased by 10 percent.Calculate the cross-price elasticity of demand between Starbucks coffee and Peet's coffee.What is the relationship between the two products?

Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes in general.

Figure 6-1 -Refer to Figure 6-1.The demand curve on which elasticity changes at every point is given in

If a firm raised its price and discovered that its total revenue fell, then the demand for its product is

Figure 6-10 -Refer to Figure 6-10.A perfectly inelastic supply curve is shown in

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50, the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03.These elasticities mean that beer and spirits are ________, and spirits and wine are ________.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50, the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03.These elasticities mean that beer and spirits are , and spirits and wine are .