Deck 6: Elasticity and Demand

Question 1

refer to the following figure:


-The maximum possible total revenue is $_________.

A) 10,500
B) 11,000
C) 11,500
D) 12,000
E) 12,500

Answer 1

12,500

Question 2

refer to the following figure:


-In the figure above, what is the point price elasticity of demand when price is $80?

A) -0.50
B) -0.75
C) -1.00
D) -1.60
E) -2.00

Answer 2

-2.00

Question 3

refer to the following figure:


-In the figure above, what is the point price elasticity of demand when price is $40?

A) -0.50
B) -0.75
C) -1.00
D) -1.50
E) -2.00

Answer 3

-0.50

Question 4

refer to the following figure:


-What is demand elasticity over the price range $40 to $60?

A) -2.00
B) -1.00
C) -0.50
D) -0.95
E) -0.71

Question 5

Use the figure to calculate the income elasticity of demand when income increases from $25,000 to $30,000:

A) -0.10
B) -1.10
C) 0.1818
D) 0.20
E) 1.10

Question 6

Use the figure to calculate the income elasticity of demand when income increases from $25,000 to $30,000:

A) -1.0
B) -0.1818
C) 0.1818
D) -1.5
E) 1.2

Question 7

Use the figure below to calculate the cross-price elasticity of demand for good X when the price of good Y increases from $12 to $14:

A) 0.645
B) 0.42
C) 0.20
D) 2.00
E) 15.38

Question 8

refer to the following table showing a demand schedule:


-If price falls from $200 to $150, what is the elasticity of demand over this range?

A) -0.625
B) -1.0
C) -1.17
D) -2.5
E) -3.0

Question 9

refer to the following table showing a demand schedule:


-If price falls from $150 to $100, what is the elasticity of demand over this range?

A) -0.625
B) -1.0
C) -1.17
D) -2.5
E) -3.0

Question 10

refer to the following table showing a demand schedule:


-When the price of corn dogs is $0.50, 10,000 corn dogs are demanded. When the price of corn dogs is $1.20, 5,000 are demanded. What is the price elasticity of demand for corn dogs?

A) -0.40
B) -0.81
C) -1.20
D) -1.40

Question 11

If the price elasticity of DVD recorders is -0.3 and price increases 20%, what happens to the quantity of DVD recorders demanded?

A) quantity decreases by 26%
B) quantity decreases by 6.5%
C) quantity increases by 15%
D) quantity increases by 21%

Question 12

E₁ is demand elasticity for Minute Maid orange juice, E₂ is demand elasticity for all orange juice, and E₃ is demand elasticity for all fruit drinks. Then

A) |E₁| > |E₂| > |E₃|
B) |E₂| > |E₃| > |E₁|
C) |E₃| > |E₁| > |E₂|
D) |E₃| > |E₂| > |E₁|

Question 13

refer to the following graph:


-The price elasticity of demand over the price interval $90 to $110 is

A) -0.5
B) -1.0
C) -1.5
D) -2.0
E) -0.4

Question 14

refer to the following figure:
?

-Marginal revenue is zero at Q = ________.

A) 1,000 units
B) 2,000 units
C) 3,000 units
D) 4,000 units
E) none of the above

Question 15

Suppose the demand for good X is
https://storage.examlex.com/TB10434/.This demand curve has a ________ (constant, variable) elasticity of demand equal to ________.

A) variable; -0.5
B) constant; -0.2
C) constant; -1
D) variable; -2

Question 16

The price elasticity of demand for a firm's product is -2.25 over the range of prices being considered by the firm's manager.

-If the manager increases the price of the product by 8 percent, the manager predicts that quantity demanded will _____________ by _______ percent.

Question 17

The price elasticity of demand for a firm's product is -2.25 over the range of prices being considered by the firm's manager.

-If the manager wishes to increase sales by 25 percent, the manager predicts the price of the product must be _____________ by _______ percent.

Question 18

Fill in the blanks.
-When demand is inelastic, the __________ effect dominates the __________ effect.

Question 19

Fill in the blanks.
-When demand is elastic, the __________ effect dominates the __________ effect.

Question 20

Fill in the blanks.
-When demand is unitary elastic, ___________ effect dominates.

Question 21

Fill in the blanks.
-When a change in price causes a change in quantity demanded, total revenue always moves in the ____________ direction as the variable (P or Q) having the _____________ effect.

Question 22

Fill in the blanks.
-When demand is elastic, a decrease in price causes quantity demanded to ___________ and total revenue to ________.

Question 23

Fill in the blanks.
-When demand is inelastic, an increase in price causes quantity demanded to __________ and total revenue to _________.

Question 24

Fill in the blanks.
-When demand is unitary elastic, an increase in price causes quantity demanded to _________________ and total revenue to ___________________.

Question 25

Fill in the blanks.
-If price falls and total revenue rises, demand must be _____________________.

Question 26

Fill in the blanks.
-If price rises and total revenue stays the same, demand must be ____________________.

Question 27

Fill in the blanks.
-If price rises and total revenue rises, demand must be _____________________.

Question 28

Use the figure below to answer the following questions:

-The elasticity of demand over the price interval $11 to $10 is __________.

Question 29

Use the figure below to answer the following questions:

-The elasticity of demand over the price interval $7 to $5 is __________.

Question 30

Use the figure below to answer the following questions:

-The elasticity of demand over the price interval $5 to $3 is __________.

Question 31

Use the linear demand curve shown below to answer the following questions.
The point elasticity of demand at a price of $650 is _________.
-The point elasticity of demand at a price of $650 is _________.

Question 32

Use the linear demand curve shown below to answer the following questions.
The point elasticity of demand at a price of $650 is _________.
-The point elasticity of demand at a price of $220 is _________.

Question 33

Use the linear demand curve shown below to answer the following questions.
The point elasticity of demand at a price of $650 is _________.
-Demand is unitary elastic at a price of $_________.

Question 34

Use the linear demand curve shown below to answer the following questions.
The point elasticity of demand at a price of $650 is _________.
-As price falls, |E| __________________ (gets larger, gets smaller, stays the same) for a linear demand curve.

Question 35

In the graph shown below, the demand for good X shifts due to a change in income. Holding the price of good X constant at $200, answer the following questions:

-The graph shows how the demand
for X shifts when income decreases from $45,000 to $42,000. Using the information in the graph, the income elasticity of demand for X is calculated to be _________.

Question 36

In the graph shown below, the demand for good X shifts due to a change in income. Holding the price of good X constant at $200, answer the following questions:

-Good X is a ____________good.

Question 37

In the graph shown below, the demand for good X shifts due to a change in the price of a related good Y. Holding the price of good X constant at $200, answer the following questions:

-The graph shows how the demand for X shifts when the price of related good Y decreases from $120 to $100. Using the information in the graph, the cross-price elasticity of
demand for X and Y is calculated to be _________.

Question 38

In the graph shown below, the demand for good X shifts due to a change in the price of a related good Y. Holding the price of good X constant at $200, answer the following questions:

-Goods X and Y are ________________.

Question 39

Using the following demand schedule, calculate total revenue, marginal revenue, and price elasticity of demand. Then show the relation among marginal revenue, price, and elasticity of demand.

Question 40

Use the graph below to answer the following questions:

-The elasticity of demand at a price of $12 is _________.

Question 41

Use the graph below to answer the following questions:

-The elasticity of demand at a price of $4 is _________.

Question 42

Use the graph below to answer the following questions:

-At point A, if price increases by a small amount, total revenue _____________ (rises, falls, remains constant), and marginal revenue is __________________ (positive, negative, zero).

Question 43

Use the graph below to answer the following questions:

-At point B, if price decreases by a small amount, total revenue _____________ (rises, falls, remains constant), and marginal revenue is _______________ (positive, negative, zero).

Question 44

Fill in the blanks in the figure below:
a. ________
b. ________
c. ________
d. ________
e. ________
f. ________
g. ________
h. ________
‪

Question 45

Boeing estimates the elasticity of demand for new commercial jets is -1.25. Explain why the following statements are either true or false (i.e., state whether true or false and explain why.)

-"The price effect dominates the quantity effect."

Question 46

Boeing estimates the elasticity of demand for new commercial jets is -1.25. Explain why the following statements are either true or false (i.e., state whether true or false and explain why.)

-"A 4 percent increase in the number of jets sold will require a 5 percent decrease in the price of jets."

Question 47

Boeing estimates the elasticity of demand for new commercial jets is -1.25. Explain why the following statements are either true or false (i.e., state whether true or false and explain why.)

-"A 5 percent decrease in the price of jets will increase Boeing's total revenue."