Question 1

How are the cross elasticity of demand and income elasticity of demand similar and how are they different from the price elasticity of demand?

Accepted Answer

The answer of How are the cross elasticity of demand...

Question 2

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles, using the midpoint method, what is the price elasticity of demand for suntan lotion?

Accepted Answer

The answer of If the price of suntan lotion increases...

Question 3

Water is considered a necessity. So, is the demand for water elastic or inelastic?

Accepted Answer

The answer of Water is considered a necessity. So, is...

Question 4

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

Accepted Answer

The answer of Explain why the cross elasticity of demand...

Question 5

During a recession when people's incomes drop, grocery chains experience much smaller declines in sales than do upscale department stores. Explain this phenomenon using the concept of elasticity.

Accepted Answer

The answer of During a recession when people's incomes drop,...

Question 6

What is the price elasticity of supply? List and briefly define three cases of the price elasticity of supply.

Accepted Answer

The answer of What is the price elasticity of supply?...

Question 7

Joe's monthly income increases from $1,000 to $2,000. As a result, he decreases the number of his fast food meals from 20 to 5 per month. To Joe, are fast-food meals a normal or an inferior good? What kind of elasticity can tell the answer? Explain.

Accepted Answer

The answer of Joe's monthly income increases from $1,000 to...

Question 8

The income elasticity of demand for store brands of soda (that is, non-name brands) is negative. What does this fact indicate about consumers' perceptions about the store brands?

Accepted Answer

The answer of The income elasticity of demand for store...

Question 9

What kind of elasticity is relevant when you are trying to figure out how a price cut by the burger shop next door will affect the demand for your pizza? Explain.

Accepted Answer

The answer of What kind of elasticity is relevant when...

Question 10

If cable TV subscriptions and movie rentals are substitutes for each other, what is the effect in each of these markets of an increase in wages for people who work for the cable TV company? Use your analysis to determine the sign of the cross elasticity of demand between the quantity of movie rentals and the price of cable TV.

Accepted Answer

The answer of If cable TV subscriptions and movie rentals...

Question 11

The price elasticity of demand is always positive, as is the price elasticity of supply. Is the cross elasticity of demand always positive? Explain your answer.

Accepted Answer

The answer of The price elasticity of demand is always...

Question 12

Which demand is more price elastic: The demand for all personal computers or the demand for Dell computers? Explain your answer.

Accepted Answer

The answer of Which demand is more price elastic: The...

Question 13

"The number of substitutes available affects the price elasticity of demand for a good. So one way to know if apples and oranges are substitutes for each other is to look at the price elasticity of demand for each." Comment on this assertion.

Accepted Answer

The answer of "The number of substitutes available affects the...

Question 14

Is there any set of relationships between price elasticity of supply and total revenue similar to the relationships between price elasticity of demand and total revenue?

Accepted Answer

The answer of Is there any set of relationships between...

Question 15

Explain why the availability of resources affects the elasticity of supply.

Accepted Answer

The answer of Explain why the availability of resources affects...

Question 16

Studies have shown that the price elasticity of demand for necessities, such as food, are higher in developing countries and lower in developed countries. What is the reason for this difference in elasticity?

Accepted Answer

The answer of Studies have shown that the price elasticity...

Question 17

Suppose the price of flour increases from $0.80 to $1.00 a pound and the quantity demanded decreases from 100 pounds to 95 pounds. Using the midpoint method, what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic?

Accepted Answer

The answer of Suppose the price of flour increases from...

Question 18

Explain why the number of substitutes influences the price elasticity of demand.

Accepted Answer

The answer of Explain why the number of substitutes influences...

Question 19

"The fewer the number of substitutes for a good, the more elastic the demand for that good." Is the previous statement true or false?

Accepted Answer

The answer of "The fewer the number of substitutes for...

Question 20

If addiction makes cigarettes such a necessity, is it correct to think that cigarettes are perfectly inelastic in both supply and demand.

Accepted Answer

The answer of If addiction makes cigarettes such a necessity,...

Quiz 4: Elasticity