Question 1

Table 6-3
 
-Refer to Table 6-3.Over what range of prices is the demand elastic?

Accepted Answer

A)  over the entire range of prices 
B)  between $14 and $16 
C)  between $8 and $16 
D)  between $2 and $8

Question 2

The estimated price elasticities of demand for the products listed in the table as "Product A" are from Table 6-2 in the text.Indicate whether the products listed as "Product B" will have a more elastic or less elastic demand than the corresponding Product A.

Accepted Answer

The answer of The estimated price elasticities of demand for...

Question 3

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

Accepted Answer

The answer of When the price of Starbucks coffee increased...

Question 4

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

Accepted Answer

A)  The quantity demanded and total revenue remain the same. 
B)  The quantity demanded does not change but total revenue increases. 
C)  The quantity demanded and total revenue fall to zero. 
D)  The quantity demanded does not change but total revenue decreases.

Question 5

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following goods would have the most inelastic demand?

Accepted Answer

A)  ski vacations 
B)  bread 
C)  luxury cars 
D)  big screen TVs

Question 7

Consider the following pairs of items: 
a.shampoo and conditioner
b.iPhones and earbuds
c.a laptop computer and a desktop computer
d.beef and pork
e.air-travel and weed killer
Which of the pairs listed will have a positive cross-price elasticity?

Accepted Answer

A)  a and b only 
B)  c and d only 
C)  e only 
D)  a, b, and c only

Question 8

Figure 6-8 
-Refer to Figure 6-8.Identify the two goods which are substitutes.

Accepted Answer

A)  Good X and Good Y 
B)  Good Y and Good Z 
C)  Good X and Good Z 
D)  It is not possible to distinguish any relationship among the goods.

Question 9

Inelastic supply occurs whenever the elasticity of supply value is

Accepted Answer

A)  negative and  1. 
D)  positive and < 1.

Question 10

Suppose the price of gasoline is $3.50 per gallon,the quantity of gasoline demanded is 150 billion gallons per year,the price elasticity of demand for gasoline is -0.06,and the federal government decides to increase the excise tax on gasoline by $1.00 per gallon,which increases the price of gasoline by $0.75 per gallon.What is the new equilibrium quantity of gasoline demanded after the tax is imposed?

Accepted Answer

A)  109.72 billion gallons per year 
B)  127.25 billion gallons per year 
C)  148.27 billion gallons per year 
D)  161.61 billion gallons per year

Question 11

Suppose the absolute value of the price elasticity of demand for meals at Fortune Buffet House is ∞.What happens to sales revenue if the restaurant increases its price by 5 percent?

Accepted Answer

A)  Sales revenue falls by less than 5 percent. 
B)  Sales revenue remains unchanged. 
C)  Sales revenue falls by 100 percent. 
D)  It cannot be determined without information on prices.

Question 12

At a price of $8 per dozen,Chuy sells 40 dozen homemade tamales per week.When he raised her price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is

Accepted Answer

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

Question 13

If demand is inelastic,the absolute value of the price elasticity of demand is

Accepted Answer

A)  one. 
B)  less than one. 
C)  greater than one. 
D)  greater than the absolute value of the slope of the demand curve.

Question 14

The demand for heating oil in the short run is more elastic than the long run demand for heating oil.

Accepted Answer

A) True 
 B)False

Question 15

Using cross-sectional data from the two Housing Assistance Supply Experiment (HASE)sites--Brown County,Wisconsin,and St.Joseph County,Indiana,John Mulford of Rand Research estimates that the long-run "permanent" income elasticity of housing expenditures to be 0.45 for owners.Using this information,what is likely to happen to housing expenditures if the government increases income transfers to recipients in HASE sites?

Accepted Answer

A)  Housing expenditures will increase significantly. 
B)  Housing expenditures in HASE sites significantly will fall as recipients moved out of these areas to higher-income areas. 
C)  Housing expenditures will increase, but not significantly. 
D)  Housing expenditures will decrease by a small amount.

Question 16

Explain the relationship between price elasticity of demand and total revenue.

Accepted Answer

The answer of Explain the relationship between price elasticity of...

Question 17

The government of Bassaland is looking for new revenue sources.It is considering imposing an excise tax on two goods: palm wine and diapers.If the price elasticity of demand for the goods are -0.47 and -1.89 respectively,which good should it tax if the goal is to raise revenue? If the government wants to tax only one good,which good should it tax if the goal is to discourage consumption? Explain your answer.

Accepted Answer

The answer of The government of Bassaland is looking for...

Question 18

The price elasticity of supply for umbrellas is 2.Suppose you're told that following a price increase,quantity supplied increased by 30 percent.What was the percentage change in price that brought this about?

Accepted Answer

A)  60 percent 
B)  15 percent 
C)  6.7 percent 
D)  impossible to determine without additional information

Question 19

The demand for most farm products is relatively inelastic.A drought that reduces the supply of farm products will also cause farm revenues to fall.

Accepted Answer

A) True 
 B)False

Question 20

If the demand for a steak is unit-elastic,then

Accepted Answer

A)  the percentage change in quantity demanded is 1 percent greater than the percentage change in price. 
B)  the percentage change in quantity demanded is equal to the percentage change in price. 
C)  the percentage change in quantity demanded is 100 percent greater than the percentage change in price (in absolute value). 
D)  quantity demanded does not respond to changes in price.

Exam 6: Elasticity: The Responsiveness of Demand and Supply

Table 6-3 -Refer to Table 6-3.Over what range of prices is the demand elastic?

The estimated price elasticities of demand for the products listed in the table as "Product A" are from Table 6-2 in the text.Indicate whether the products listed as "Product B" will have a more elastic or less elastic demand than the corresponding Product A.

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

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

Which of the following goods would have the most inelastic demand?

Consider the following pairs of items: a.shampoo and conditioner b.iPhones and earbuds c.a laptop computer and a desktop computer d.beef and pork e.air-travel and weed killer Which of the pairs listed will have a positive cross-price elasticity?

Figure 6-8 -Refer to Figure 6-8.Identify the two goods which are substitutes.

Inelastic supply occurs whenever the elasticity of supply value is

Suppose the absolute value of the price elasticity of demand for meals at Fortune Buffet House is ∞.What happens to sales revenue if the restaurant increases its price by 5 percent?

At a price of $8 per dozen,Chuy sells 40 dozen homemade tamales per week.When he raised her price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is

If demand is inelastic,the absolute value of the price elasticity of demand is

The demand for heating oil in the short run is more elastic than the long run demand for heating oil.

Explain the relationship between price elasticity of demand and total revenue.

The price elasticity of supply for umbrellas is 2.Suppose you're told that following a price increase,quantity supplied increased by 30 percent.What was the percentage change in price that brought this about?

The demand for most farm products is relatively inelastic.A drought that reduces the supply of farm products will also cause farm revenues to fall.

If the demand for a steak is unit-elastic,then