Exam 20: Consumer Choice and Elasticity

Making drugs, such as cocaine, illegal results in a higher price than would be present if the drugs were legal. All else constant, the higher price results in drug users spending

If the board of regents of a major state university system plans to raise tuition in order to increase revenues, the regents must believe student demand is

Suppose the value of income elasticity of demand for a private college education is equal to 1.5. This means that

Figure 7-16 -Which demand curve in Figure 7-16 is perfectly elastic?

Suppose the athletic department wanted to increase revenues by decreasing ticket prices to football games. This would make sense only if the price elasticity of demand for football games was (in absolute value)

If Sarah's income rises by 20 percent, and, as a result, she purchases 40 percent more designer clothing, her income elasticity for designer clothing is

A 20 percent increase in the price of sugar reduces sugar consumption by about 10 percent. Such a price increase causes households to

Compared to the long run, consumers typically ____ to price changes in the short run.

Since the income elasticity for food is estimated to be 0.51, it appears that the proportion of income spent by poor people on food is ____ the proportion spent by those with higher incomes.

If a 10 percent rise in price leads to a reduction in quantity demanded of more than 10 percent,

Table 7-1 -Refer to Table 7-1. Whose demand does not conform to the law of demand?

A local Krispy Kreme doughnut shop reduced the price of its doughnuts from $4 per dozen to $3.50 per dozen, and as a result, the daily sales increased from 300 to 400 dozen. This indicates that the price elasticity of demand for the doughnuts was

All else equal, if a firm raises its price by 20 percent and the firm's total revenue falls by 20 percent,

A 15 percent increase in the price of beef reduces the quantity of beef consumed by 30 percent. Thus, the demand for beef is ____, and total consumer expenditure (or total firm revenue) will ____ as a result of the price increase. (Fill in the blanks.)

If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the Pepsi-Cola Company could increase its total revenue by

Suppose the state of New York imposes a one dollar per pack tax on cigarettes, which increases their price by 30 percent, and as a result, the quantity sold declines by 20 percent. The price elasticity of demand for cigarettes is equal to

If the demand for a good is elastic, then total revenue

Jane received a 10 percent increase in her salary and purchased 20 percent more jewelry. For Jane, jewelry

Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption by 10 percent. If the price elasticity of demand for water is -.25, by how much would you have to raise the price of water?

If a 10 percent increase in income induced a group of consumers to reduce their yearly purchases of potatoes by 5 percent, for these consumers,