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Microeconomics Study Set 29

Business

Quiz 4 :

Elasticity

Quiz 4 :

Elasticity

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Consider the following data for a hypothetical economy. img -Refer to Table 4- 5. The cross- price elasticity of demand for transit passes in terms of the price of gasoline is . A rise in the price of gasoline causes the demand curve for transit passes to shift to the _.
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Answer:

A

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An upward- sloping straight- line supply curve through the origin has an elasticity of
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Answer:

E

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Suppose you are shown two intersecting demand curves that are drawn on the same scale. At the point of intersection, one of the demand curves is steeper than the other. Which of the following could explain the difference in slopes?
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Answer:

D

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img FIGURE 4- 2 -Refer to Figure 4- 2. The price elasticity of demand is constant as price changes in part(s)
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If demand is unit elastic at all prices, then the demand curve is
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img -Refer to Table 4- 2. Using the data provided to plot the demand curve for ski tickets results in a Demand curve. Price elasticity along this demand curve is therefore _ as price is falling.
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If the total expenditure on clothing decreases when the price of clothing falls, the price elasticity of demand is
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We can expect that the income elasticity of demand for gourmet catered meals would be the income elasticity of demand for meals from a fast- food restaurant.
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Given that elasticity of supply changes over time, in the short run an increase in demand will generally cause
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A perfectly horizontal demand curve shows that the own- price elasticity of demand is
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When the percentage change in quantity demanded resulting from a price change is less than the percentage change in price, demand is said to be
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If firms' costs rise rapidly as output increases, the
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The formula for income elasticity of demand may be written as which of the following?
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An increase in income will
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Suppose you are advising the government on changes in the gasoline market. The current price is $1.00 per litre and the quantity demanded is 2.5 million litres per day. Long- run price elasticity of demand is constant at 0.8. If the supply of gasoline is reduced so that the price rises to $1.50 per litre, then quantity demanded is predicted to fall in the long run by
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Suppose the cross- elasticity of demand between two goods, X and Y, is negative. If the price of X decreases, the quantity demanded will
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Suppose the cross- elasticity of demand for two goods, X and Y, is positive. If the price of Y falls, then quantity demanded will
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Income elasticity measures the change in quantity demanded of some product with respect to changes in
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If the price elasticity of demand for some good is 2.7, a 10 percent increase in the price results in
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Income elasticity of demand measures the extent to which
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