Question 1

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

Accepted Answer

A)  chocolate ice cream and sprinkles 
B)  ice cream shakes and hamburgers 
C)  fries and ketchup 
D)  Pepsi and Coke 
E)  onion rings and chicken strips 
A)  chocolate ice cream and sprinkles 
B)  ice cream shakes and hamburgers 
C)  fries and ketchup 
D)  Pepsi and Coke 
E)  onion rings and chicken strips

Question 2

The demand for Mariana's earrings can be represented by the equation: Qd = -2P + 10 
a.Graph the demand equation; include the x and y intercepts.
b.If the price = $4.50,what is quantity demanded? If the price decreases to $4.00,what is the quantity demanded? What is the price elasticity of demand between these two points along the demand curve?
c.Repeat the calculations in parts (a)and (b)for price = $1.00 and $0.50.Determine the quantity demanded at each price and the price elasticity of demand at this point on the graph.

Accepted Answer

a.
 @#IMG-DLM& 
b.At a price = $4.50,quantity dema

Question 3

Zumba classes sell 20 participant spots at a price of $4.50 each.When the instructor raised the prices to $5.50,10 people attended the class.From the midpoint method,the price elasticity of demand for Zumba is

Accepted Answer

A) -0.50. 
B)  -3.33. 
C)  -2.50. 
D)  0.20. 
E)  -0.20. 
A) -0.50. 
B)  -3.33. 
C)  -2.50. 
D)  0.20. 
E)  -0.20.

Question 4

In a typical demand curve,the price elastic portion of demand is found in the ________ region and the price inelastic portion of demand is found in the ________ region of the graph.

Accepted Answer

A)  middle; lower 
B)  lower; upper 
C)  upper; lower 
D)  middle; middle 
E)  None of these choices are correct. 
A)  middle; lower 
B)  lower; upper 
C)  upper; lower 
D)  middle; middle 
E)  None of these choices are correct.

Question 5

In the accompanying table,assume that the price of ice skates increases from $10 to $20 per pair.Using the midpoint method,what is the price elasticity of demand for ice skates for hockey players?

Accepted Answer

A)  -6.00 
B)  0.67 
C)  0.11 
D)  -0.16 
E)  3.00 
A)  -6.00 
B)  0.67 
C)  0.11 
D)  -0.16 
E)  3.00

Question 6

A shopping mall owner is given a list of income elasticity of demand values.Which one represents a necessity?

Accepted Answer

A)  -5 
B)  -0.5 
C)  0 
D)  5 
E)  0.5 
A)  -5 
B)  -0.5 
C)  0 
D)  5 
E)  0.5

Question 7

Suppose that the supply curve for televisions is linear and has a slope of 1.Graph the effect of the following on the supply curve and explain each:
a.the availability of inputs (LED screens and wires)for increases for televisions.
b.the time period of supply under consideration shortens to the upcoming week.

Accepted Answer

a.
 @#IMG-DLM& 
The increased availability of inpu

Question 8

Refer to the following graphs to answer the following questions.
A.   B.   C.   D.   E.  
-Which of these graphs represents relatively price elastic demand for a good?

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E

Question 9

When the price elasticity of demand is -0.6,then a ________ increase in price leads to a ________ in quantity demanded.

Accepted Answer

A)  10 percent; 6 percent increase 
B)  10 percent; 6 percent decrease 
C)  6 percent; 6 percent increase 
D)  1 percent; 6 percent decrease 
E)  6 percent; 1 percent decrease 
A)  10 percent; 6 percent increase 
B)  10 percent; 6 percent decrease 
C)  6 percent; 6 percent increase 
D)  1 percent; 6 percent decrease 
E)  6 percent; 1 percent decrease

Question 10

Demand is almost always more price elastic in the long run because

Accepted Answer

A)  people's preferences change. 
B)  newer versions of a good or service replace older ones. 
C)  production of the good or service stops. 
D)  more options become available and people can make different choices. 
E)  government regulations increase. 
A)  people's preferences change. 
B)  newer versions of a good or service replace older ones. 
C)  production of the good or service stops. 
D)  more options become available and people can make different choices. 
E)  government regulations increase.

Question 11

If the percentage change in quantity demanded of Good B is 2 percent and the percentage change in the price of Good A is -10 percent,what is the cross-price elasticity of demand?

Accepted Answer

A)  0.20 
B)  -5 
C)  1 
D)  5 
E)  -0.20 
A)  0.20 
B)  -5 
C)  1 
D)  5 
E)  -0.20

Question 12

The percentage change in price is 5 percent,while the price elasticity of supply is 0.The percentage change in quantity supplied

Accepted Answer

A)  is 1.5 percent. 
B)  does not change. 
C)  is 2 percent. 
D)  is -3 percent. 
E)  is -7 percent. 
A)  is 1.5 percent. 
B)  does not change. 
C)  is 2 percent. 
D)  is -3 percent. 
E)  is -7 percent.

Question 13

Use the accompanying graph to answer the following questions.
   
a.A study shows the many health benefits of eating eggs for breakfast.Demand rises by 6 units at each price.Draw this on the graph.
b.What is the percentage change in equilibrium price for eggs?
c.If the percentage change in quantity demanded for toast decreased by 1/2 of what you found in part (b)for eggs,what is the cross-price elasticity of demand for eggs and toast?
d.Will this be positive or negative? Are eggs and toast related to each other?

Accepted Answer

a.
 @#IMG-DLM& 
This is illustrated with a demand

Question 14

The initial price of picture frames is $6 and suppliers offer 20 frames.When the price falls to $4,suppliers offer only 10.The price elasticity of supply is

Accepted Answer

A)  0.33. 
B)  0.67. 
C)  1.67. 
D)  0.60. 
E)  0.40. 
A)  0.33. 
B)  0.67. 
C)  1.67. 
D)  0.60. 
E)  0.40.

Question 15

Used car dealers find that their sales rise in a recession.We can be certain that consumers view used cars as

Accepted Answer

A)  necessities. 
B)  normal goods. 
C)  luxuries. 
D)  substitutes. 
E)  inferior. 
A)  necessities. 
B)  normal goods. 
C)  luxuries. 
D)  substitutes. 
E)  inferior.

Question 16

Graph the following situations:
a.Brenda's cats love Kitty Kat Treats,and she will buy as much as the store has at the current price of $2.But when the price of Kitty Kat Treats increases by even 5 cents,she won't buy any!
b.Brenda will buy 20 bags of Kitty Kat Treats at any price.
c.If the price of Kitty Kat Treats rises by 5 percent,Brenda will decrease her quantity demanded by 10 percent.

Accepted Answer

a.
 @#IMG-DLM& 
This situation illustrates perfect

Question 17

At higher prices,the price elasticity of demand is likely to be ________,whereas it is likely to be ________ at lower prices.

Accepted Answer

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

Question 18

We would expect to see a positive cross-price elasticity between

Accepted Answer

A)  peanut butter and jelly. 
B)  ice cream and frozen yogurt. 
C)  basketballs and steak. 
D)  sneakers and socks. 
E)  computers and iPods. 
A)  peanut butter and jelly. 
B)  ice cream and frozen yogurt. 
C)  basketballs and steak. 
D)  sneakers and socks. 
E)  computers and iPods.

Question 19

At a price of $5/hour,Karina wants to hire three workers.When the price rises to $7/hour,she wants to hire only two workers.Karina's price elasticity of demand for workers is

Accepted Answer

A)  -0.83. 
B) -1.20. 
C)  -0.33. 
D)  -0.40. 
E)  -0.10. 
A)  -0.83. 
B) -1.20. 
C)  -0.33. 
D)  -0.40. 
E)  -0.10.

Question 20

Refer to the accompanying graph.
   
a.Calculate the income elasticity of demand for televisions at a price of $550.
b.Are televisions a luxury good,necessity good,or inferior good? Explain.
c.Name a good for which consumption would likely fall when there is an increase in income from $20,000 to $30,000.Explain your reasoning.

Accepted Answer

a.Income elasticity of demand = percenta

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

Zumba classes sell 20 participant spots at a price of $4.50 each.When the instructor raised the prices to $5.50,10 people attended the class.From the midpoint method,the price elasticity of demand for Zumba is

In a typical demand curve,the price elastic portion of demand is found in the region and the price inelastic portion of demand is found in the region of the graph.

In the accompanying table,assume that the price of ice skates increases from $10 to $20 per pair.Using the midpoint method,what is the price elasticity of demand for ice skates for hockey players?

A shopping mall owner is given a list of income elasticity of demand values.Which one represents a necessity?

Refer to the following graphs to answer the following questions. A. B. C. D. E. -Which of these graphs represents relatively price elastic demand for a good?

When the price elasticity of demand is -0.6,then a increase in price leads to a in quantity demanded.

Demand is almost always more price elastic in the long run because

If the percentage change in quantity demanded of Good B is 2 percent and the percentage change in the price of Good A is -10 percent,what is the cross-price elasticity of demand?

The percentage change in price is 5 percent,while the price elasticity of supply is 0.The percentage change in quantity supplied

The initial price of picture frames is $6 and suppliers offer 20 frames.When the price falls to $4,suppliers offer only 10.The price elasticity of supply is

Used car dealers find that their sales rise in a recession.We can be certain that consumers view used cars as

At higher prices,the price elasticity of demand is likely to be ,whereas it is likely to be at lower prices.

We would expect to see a positive cross-price elasticity between

At a price of $5/hour,Karina wants to hire three workers.When the price rises to $7/hour,she wants to hire only two workers.Karina's price elasticity of demand for workers is

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

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

Zumba classes sell 20 participant spots at a price of $4.50 each.When the instructor raised the prices to $5.50,10 people attended the class.From the midpoint method,the price elasticity of demand for Zumba is

In a typical demand curve,the price elastic portion of demand is found in the ________ region and the price inelastic portion of demand is found in the ________ region of the graph.

In the accompanying table,assume that the price of ice skates increases from $10 to $20 per pair.Using the midpoint method,what is the price elasticity of demand for ice skates for hockey players?

A shopping mall owner is given a list of income elasticity of demand values.Which one represents a necessity?

Refer to the following graphs to answer the following questions. A. B. C. D. E. -Which of these graphs represents relatively price elastic demand for a good?

When the price elasticity of demand is -0.6,then a ________ increase in price leads to a ________ in quantity demanded.

Demand is almost always more price elastic in the long run because

If the percentage change in quantity demanded of Good B is 2 percent and the percentage change in the price of Good A is -10 percent,what is the cross-price elasticity of demand?

The percentage change in price is 5 percent,while the price elasticity of supply is 0.The percentage change in quantity supplied

The initial price of picture frames is $6 and suppliers offer 20 frames.When the price falls to $4,suppliers offer only 10.The price elasticity of supply is

Used car dealers find that their sales rise in a recession.We can be certain that consumers view used cars as

At higher prices,the price elasticity of demand is likely to be ________,whereas it is likely to be ________ at lower prices.

We would expect to see a positive cross-price elasticity between

At a price of $5/hour,Karina wants to hire three workers.When the price rises to $7/hour,she wants to hire only two workers.Karina's price elasticity of demand for workers is

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

In a typical demand curve,the price elastic portion of demand is found in the region and the price inelastic portion of demand is found in the region of the graph.

When the price elasticity of demand is -0.6,then a increase in price leads to a in quantity demanded.

At higher prices,the price elasticity of demand is likely to be ,whereas it is likely to be at lower prices.