Question 1

Specifically,what might cause the quantity demanded of a particular good to double at a particular price?

Accepted Answer

The answer of Specifically,what might cause the quantity demanded of...

Question 2

How might a market research analyst use measures of elasticity-price,cross,and income-in her work? Explain.

Accepted Answer

The answer of How might a market research analyst use...

Question 3

If the income of buyers increases and a company maintains the same price,what is the most likely impact on quantity sold? Explain.Draw a graphical display of the result.

Accepted Answer

The answer of If the income of buyers increases and...

Question 4

Why is it customary to report price elasticity of demand in absolute value terms,while cross elasticities and income elasticities are reported with their sign attached?

Accepted Answer

The answer of Why is it customary to report price...

Question 5

What is an optimal decision?

Accepted Answer

The answer of What is an optimal decision?...

Question 6

A unit-elastic demand curve never touches or crosses either of the axes.Why?

Accepted Answer

The answer of A unit-elastic demand curve never touches or...

Question 7

The following table contains information regarding price and output for a firm.For each point except the first,calculate the elasticity between it and the point above.
 $\begin{array} { c c c } 
\text { Price } & \text { Quantity } & \text { Elasticity } \
\$ 7 & 10 & - --\
6 & 20 & - -- \
5 & 30 &  - --\
4 & 40 & - -- \
3 & 50 &  - --\
2 & 60 &  - --\
1 & 70 &  - --
\end{array}$

Accepted Answer

The answer of The following table contains information regarding price...

Question 8

What does cross elasticity of demand between goods reveal about the nature of relationship between them?

Accepted Answer

The answer of What does cross elasticity of demand between...

Question 9

In a past fare war,U.S.Air reduced the price of its Charlotte,North Carolina,to New York City round-trip fare from $198 to $138 to match American Airlines.U.S.Air did so reluctantly,saying it would cost the company millions of dollars in revenue.American,on the other hand,believed the fare cut would increase its revenue.What different assumptions about the underlying price elasticity of demand did each airline believe true?

Accepted Answer

The answer of In a past fare war,U.S.Air reduced the...

Question 10

What is the shape of a perfectly elastic demand curve? Explain its significance for a seller.

Accepted Answer

The answer of What is the shape of a perfectly...

Question 11

Along a straight-line demand curve,why does the price elasticity of demand grow steadily smaller as we move from left to right?

Accepted Answer

The answer of Along a straight-line demand curve,why does the...

Question 12

The cross elasticity between two goods has been measured at - 1.2.How are the goods related? Explain.Give an example of goods for which this might be a reasonable measure of cross elasticity.

Accepted Answer

The answer of The cross elasticity between two goods has...

Question 13

How can one tell from cross elasticity what kind of relationship exists between any two goods?

Accepted Answer

The answer of How can one tell from cross elasticity...

Question 14

Arrange the following goods from least to most elastic,explaining your ordering: gasoline,Exxon gas,Exxon gas at a particular gas station.

Accepted Answer

The answer of Arrange the following goods from least to...

Question 15

Suppose that elasticity has been reliably measured as 1.55 and the unit price decreases from $20 to $17.50.How much will quantity demanded increase?

Accepted Answer

The answer of Suppose that elasticity has been reliably measured...

Question 16

How might a court use cross elasticity in an antitrust case?

Accepted Answer

The answer of How might a court use cross elasticity...

Question 17

Sun City's public bus line has been operating at a deficit.The city decides to raise the fare from 50 cents to 75 cents,anticipating enough additional revenue to cover the deficit.What assumption is the city making about price elasticity?

Accepted Answer

The answer of Sun City's public bus line has been...

Question 18

For each pair of goods,explain which is more elastic: toothpicks vs.cars; electricity vs.yachts; IBM computers vs.Apple computers.

Accepted Answer

The answer of For each pair of goods,explain which is...

Question 19

Using the general concept of elasticity,would you expect the elasticity of demand for advertising to be positive or negative? Explain.

Accepted Answer

The answer of Using the general concept of elasticity,would you...

Question 20

What are the main determinants of demand elasticity? Explain their importance.

Accepted Answer

The answer of What are the main determinants of demand...

Quiz 6: Demand and Elasticity