Question 1

The measure of the responsiveness of the demand for one good to the percentage change in the price of the other good is

Accepted Answer

A)  slope. 
B)  price elasticity of supply. 
C)  price elasticity of demand. 
D)  cross-price elasticity. 
E)  income elasticity. 
A)  slope. 
B)  price elasticity of supply. 
C)  price elasticity of demand. 
D)  cross-price elasticity. 
E)  income elasticity. D

Question 2

Refer to the accompanying table.When the price drops from $5 to $3,price elasticity of demand for sushi (using the midpoint method)at an income of $30,000 is

Accepted Answer

A)  0.71. 
B)  0.67. 
C)  0.10. 
D)  0.33. 
E)  -0.67. 
A)  0.71. 
B)  0.67. 
C)  0.10. 
D)  0.33. 
E)  -0.67. E

Question 3

The supply curve for Fancy Flowers is represented by the equation Qs = 5 + 10P.
a.Graph the supply curve.
b.Using prices of $5 and $2,determine whether the price elasticity of supply is elastic or inelastic.

Accepted Answer

a.
  
 b.At a price of $5,quantity supplied is 55 units.At a price of $2,quantity supplied is 25 units.Elasticity of supply = {(55 - 25)/[(55 + 25)/2]}/{(2 - 5)/[(2 + 5)/2]} =0.875

Question 4

Price elasticity of demand measures the change in

Accepted Answer

A)  quantity demanded due to the change in price. 
B)  demand due to the change in price. 
C)  quantity demanded due to the change in price of another good or service. 
D)  price due to a change in quantity demanded. 
E)  price due to the change in demand. 
A)  quantity demanded due to the change in price. 
B)  demand due to the change in price. 
C)  quantity demanded due to the change in price of another good or service. 
D)  price due to a change in quantity demanded. 
E)  price due to the change in demand.

Question 5

When two goods are complements to each other,the cross-price elasticity will

Accepted Answer

A)  begin by being positive but becomes negative over time. 
B)  be unaffected by goods being complements. 
C)  be zero. 
D)  be positive. 
E)  be negative. 
A)  begin by being positive but becomes negative over time. 
B)  be unaffected by goods being complements. 
C)  be zero. 
D)  be positive. 
E)  be negative.

Question 6

As we move left along the demand curve,the price elasticity of demand

Accepted Answer

A)  becomes more inelastic. 
B)  becomes more elastic. 
C)  does not change. 
D)  becomes infinite. 
E)  moves closer to zero. 
A)  becomes more inelastic. 
B)  becomes more elastic. 
C)  does not change. 
D)  becomes infinite. 
E)  moves closer to zero.

Question 7

Refer to the accompanying table. 
   
a.Calculate the price elasticity of demand when the price rises from $450 to $550 for an individual income of $20,000.
b.Is demand elastic or inelastic? Explain your answer to the elasticity of demand you calculated in part (a)and include the mathematical equation used to find it.

Accepted Answer

a.Price elasticity of demand =percentage

Question 8

Refer to the accompanying table to answer the following questions.
  
-The price of erasers increases from $0.50 to $1.00 per eraser.Using the midpoint method,what is the cross-price elasticity of demand between pencils and erasers?

Accepted Answer

A)  -0.13 
B)  7.67 
C)  -7.67 
D)  0.13 
E)  -3 
A)  -0.13 
B)  7.67 
C)  -7.67 
D)  0.13 
E)  -3

Question 9

The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________.

Accepted Answer

A)  quantity demanded; price of a related good 
B)  quantity demanded; income 
C)  demand; price of good 
D)  quantity demanded; price of a good 
E)  income; quantity demanded 
A)  quantity demanded; price of a related good 
B)  quantity demanded; income 
C)  demand; price of good 
D)  quantity demanded; price of a good 
E)  income; quantity demanded

Question 10

Pepsi vendors who raise their price at professional sporting events increase total revenue because the price elasticity of demand is ________.When they raise their prices at gas stations,they decrease total revenue because the price elasticity of demand is ________.

Accepted Answer

A)  elastic; inelastic 
B)  unitary elastic; elastic 
C)  elastic; elastic 
D)  inelastic; elastic 
E)  elastic; unitary elastic 
A)  elastic; inelastic 
B)  unitary elastic; elastic 
C)  elastic; elastic 
D)  inelastic; elastic 
E)  elastic; unitary elastic

Question 11

Use the following scenario to answer the following questions: Dairy Wishes,a local ice cream store,finds that it sells out of ice cream sandwiches at the current price of $1.It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.
-The owners raised the price because they believed that the demand for ice cream sandwiches is

Accepted Answer

A)  inelastic. 
B)  elastic. 
C)  relatively price sensitive. 
D)  perfectly elastic. 
E)  unitary elastic. 
A)  inelastic. 
B)  elastic. 
C)  relatively price sensitive. 
D)  perfectly elastic. 
E)  unitary elastic.

Question 12

When the price elasticity of demand is elastic,a consumer is

Accepted Answer

A)  completely unresponsive to a change in price. 
B)  relatively unresponsive to a change in price. 
C)  unaffected by a change in price. 
D)  relatively responsive to a change in price. 
E)  completely responsive to a change in price. 
A)  completely unresponsive to a change in price. 
B)  relatively unresponsive to a change in price. 
C)  unaffected by a change in price. 
D)  relatively responsive to a change in price. 
E)  completely responsive to a change in price.

Question 13

What would you expect the cross-price elasticity of demand to be for chips and salsa? Explain your answer.

Accepted Answer

Chips and salsa are generally eaten toge

Question 14

When you change your quantity demanded of one good because of a change in price of another good,you are acting according to the principle of

Accepted Answer

A)  price elasticity of demand. 
B)  cross-price elasticity of demand. 
C)  income elasticity of demand. 
D)  price elasticity of supply. 
E)  income elasticity of supply. 
A)  price elasticity of demand. 
B)  cross-price elasticity of demand. 
C)  income elasticity of demand. 
D)  price elasticity of supply. 
E)  income elasticity of supply.

Question 15

The city of Huntsville is known for its wide variety of ice cream shops.What will happen if Nicola's Ice Cream Castle raises the price of its shakes?

Accepted Answer

A)  Demand will decrease by a greater proportion than the price. 
B)  Demand will increase by a greater proportion than the price. 
C)  The quantity demanded will decrease by a greater proportion than the price. 
D)  The quantity demanded will increase by a greater proportion than the price. 
E)  Demand will not change. 
A)  Demand will decrease by a greater proportion than the price. 
B)  Demand will increase by a greater proportion than the price. 
C)  The quantity demanded will decrease by a greater proportion than the price. 
D)  The quantity demanded will increase by a greater proportion than the price. 
E)  Demand will not change.

Question 16

Firms supplying twisty-ties decrease the quantity supplied of inputs by 10 percent when the price decreases by 5 percent.The price elasticity of supply for twisty-ties is

Accepted Answer

A)  4.0. 
B)  0.4. 
C)  2.0. 
D)  0.2. 
E)  1.0. 
A)  4.0. 
B)  0.4. 
C)  2.0. 
D)  0.2. 
E)  1.0.

Question 17

Graph and explain the impact that time has on the price elasticity of demand for Barney's Baked Goods.

Accepted Answer

@#IMG-DLM& Over time,price elasticity of demand fo

Question 18

When the total revenue and price both move in the same direction (are directly related),demand is

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  horizontal. 
E)  vertical. 
A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  horizontal. 
E)  vertical.

Question 19

Barney owns a bagel business in New York City and he wants to increase his total revenue.He knows that when bagels are $1,he sells 250 an hour,and when he lowers the price to $0.75,he sells 275 an hour.
a.Calculate the price elasticity of demand for Barney's bagels.
b.Using the price elasticity of demand for Barney's bagels,explain whether he should raise or lower the price to generate more revenue.
c.A bakery moves in across the street from Barney's shop.Explain what is likely to happen to the price elasticity of demand for Barney's bagels.

Accepted Answer

a.Price elasticity of demand = percentag

Question 20

If a business finds that demand for its good is very price elastic,it knows that

Accepted Answer

A)  price is very important. 
B)  price is unimportant. 
C)  price is unrelated. 
D)  the effect of price is less important than the impact of the quantity consumers buy. 
E)  the quantity consumers buy is unimportant. 
A)  price is very important. 
B)  price is unimportant. 
C)  price is unrelated. 
D)  the effect of price is less important than the impact of the quantity consumers buy. 
E)  the quantity consumers buy is unimportant.

The measure of the responsiveness of the demand for one good to the percentage change in the price of the other good is

Refer to the accompanying table.When the price drops from $5 to $3,price elasticity of demand for sushi (using the midpoint method)at an income of $30,000 is

The supply curve for Fancy Flowers is represented by the equation Q_s = 5 + 10P. a.Graph the supply curve. b.Using prices of $5 and $2,determine whether the price elasticity of supply is elastic or inelastic.

Price elasticity of demand measures the change in

When two goods are complements to each other,the cross-price elasticity will

As we move left along the demand curve,the price elasticity of demand

Refer to the accompanying table to answer the following questions. -The price of erasers increases from $0.50 to $1.00 per eraser.Using the midpoint method,what is the cross-price elasticity of demand between pencils and erasers?

The income elasticity of demand for a good measures the responsiveness of to a change in .

Pepsi vendors who raise their price at professional sporting events increase total revenue because the price elasticity of demand is .When they raise their prices at gas stations,they decrease total revenue because the price elasticity of demand is .

When the price elasticity of demand is elastic,a consumer is

What would you expect the cross-price elasticity of demand to be for chips and salsa? Explain your answer.

When you change your quantity demanded of one good because of a change in price of another good,you are acting according to the principle of

The city of Huntsville is known for its wide variety of ice cream shops.What will happen if Nicola's Ice Cream Castle raises the price of its shakes?

Firms supplying twisty-ties decrease the quantity supplied of inputs by 10 percent when the price decreases by 5 percent.The price elasticity of supply for twisty-ties is

Graph and explain the impact that time has on the price elasticity of demand for Barney's Baked Goods.

When the total revenue and price both move in the same direction (are directly related),demand is

If a business finds that demand for its good is very price elastic,it knows that

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Price Controls

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

International Trade

Filters

Exam 4: Elasticity

The measure of the responsiveness of the demand for one good to the percentage change in the price of the other good is

Refer to the accompanying table.When the price drops from $5 to $3,price elasticity of demand for sushi (using the midpoint method)at an income of $30,000 is

The supply curve for Fancy Flowers is represented by the equation Qs = 5 + 10P. a.Graph the supply curve. b.Using prices of $5 and $2,determine whether the price elasticity of supply is elastic or inelastic.

Price elasticity of demand measures the change in

When two goods are complements to each other,the cross-price elasticity will

As we move left along the demand curve,the price elasticity of demand

Refer to the accompanying table to answer the following questions. -The price of erasers increases from $0.50 to $1.00 per eraser.Using the midpoint method,what is the cross-price elasticity of demand between pencils and erasers?

The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________.

Pepsi vendors who raise their price at professional sporting events increase total revenue because the price elasticity of demand is ________.When they raise their prices at gas stations,they decrease total revenue because the price elasticity of demand is ________.

When the price elasticity of demand is elastic,a consumer is

What would you expect the cross-price elasticity of demand to be for chips and salsa? Explain your answer.

When you change your quantity demanded of one good because of a change in price of another good,you are acting according to the principle of

The city of Huntsville is known for its wide variety of ice cream shops.What will happen if Nicola's Ice Cream Castle raises the price of its shakes?

Firms supplying twisty-ties decrease the quantity supplied of inputs by 10 percent when the price decreases by 5 percent.The price elasticity of supply for twisty-ties is

Graph and explain the impact that time has on the price elasticity of demand for Barney's Baked Goods.

When the total revenue and price both move in the same direction (are directly related),demand is

If a business finds that demand for its good is very price elastic,it knows that

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Price Controls

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

International Trade

Filters

The supply curve for Fancy Flowers is represented by the equation Q_s = 5 + 10P. a.Graph the supply curve. b.Using prices of $5 and $2,determine whether the price elasticity of supply is elastic or inelastic.

The income elasticity of demand for a good measures the responsiveness of to a change in .

Pepsi vendors who raise their price at professional sporting events increase total revenue because the price elasticity of demand is .When they raise their prices at gas stations,they decrease total revenue because the price elasticity of demand is .