Quiz 6: Elasticity: The Responsiveness of Demand and Supply

Price elasticity of demand measures A) how responsive suppliers are to price changes. B) how responsive sales are to changes in the price of a related good. C) how responsive quantity demanded is to a change in price. D) how responsive sales are to a change in buyers' incomes.

Suppose the value of the price elasticity of demand is -3.What does this mean? A) A 1 percent increase in the price of the good causes quantity demanded to increase by 3 percent. B) A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent. C) A 3 percent increase in the price of the good causes quantity demanded to decrease by 1 percent. D) A $1 increase in price causes quantity demanded to fall by 3 units.

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3,then quantity demanded A) will increase by 45 percent. B) will increase by 5 percent. C) will decrease by 45 percent. D) will decrease by 5 percent.

The price elasticity of demand for Stork ice cream is -4.Suppose you're told that following a price increase,quantity demanded fell by 10 percent.What was the percentage change in price that brought about this change in quantity demanded? A) 40 percent B) 25 percent C) 2.5 percent D) 0.4 percent

If demand is inelastic,the absolute value of the price elasticity of demand is A) one. B) less than one. C) greater than one. D) greater than the absolute value of the slope of the demand curve.

A demand curve which is ________ represents perfectly inelastic demand,and a demand curve which is ________ represents inelastic demand. A) downward sloping; vertical B) horizontal; downward sloping C) vertical; downward sloping D) upward sloping; horizontal

If demand is perfectly inelastic,the absolute value of the price elasticity of demand is A) zero. B) less than one. C) more than one. D) equal to the absolute value of the slope of the demand curve.

Jenna runs a small boutique in Capitola.She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more.On the basis of this information,what can you conclude about her price elasticity of demand for wool hand warmers? A) It is elastic. B) It is perfectly elastic. C) It is perfectly inelastic. D) The price elasticity coefficient is 0.

Seth is a competitive body builder.He says he has to have his 12-oz package of protein powder to "feed his muscles" every day.On the basis of this information,what can you conclude about his price elasticity of demand for protein powder? A) It is elastic. B) It is perfectly elastic. C) It is perfectly inelastic. D) The price elasticity coefficient is 0.

Figure 6-1 -Refer to Figure 6-1.The demand curve on which elasticity changes at every point is given in A) Panel A. B) Panel B. C) Panel C. D) none of the above graphs.

Refer to Figure 6-1.A perfectly elastic demand curve is shown in A) Panel A. B) Panel B. C) Panel C. D) Panel D.

Refer to Figure 6-1.A perfectly inelastic demand curve is shown in A) Panel A. B) Panel B. C) Panel C. D) Panel D.

In September 2012,the average price of gasoline in the United States was $3.91 per gallon and consumers bought 5 percent less gasoline than they had during September 2011,when the average price was $3.66 per gallon.Based on these numbers,what was the price elasticity of demand for gasoline from September 2011 to September 2012? A) -0.33 B) -0.76 C) -2.96 D) -6.75

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15,what is the absolute value of the price elasticity of demand? Use the midpoint formula. A) 0.17 B) 0.62 C) 1.62 D) 5

Figure 6-2 -Refer to Figure 6-2.The absolute value of the price elasticity of demand at points a and b is 1.What is the value of P_b? A) $50 B) $40 C) $30 D) $20

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a ton to $180 a ton and quantity sold decreased from 800 tons to 240 tons.What is the absolute value of the price elasticity of demand? A) 0.11 B) 0.37 C) 2.69 D) 9.33

Figure 6-3 -Refer to Figure 6-3.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f. A) 0.32 B) 0.4 C) 2.5 D) 3.125

Jaycee Jeans sold 40 pairs of jeans at a price of $40.When it lowered its price to $20,the quantity sold increased to 60 pairs.Calculate the absolute value of the price elasticity of demand.Use the midpoint formula. A) 1.67 B) 1.0 C) 0.6 D) 0.53

Which of the following statements about price elasticity of demand is false? A) The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope. B) If quantity demanded changes by a larger percentage than the percentage change in price, demand is elastic. C) The value of the price elasticity of demand along a downward-sloping demand curve is always negative. D) A linear downward-sloping demand curve has a varying price elasticity coefficient.

Figure 6-4 -Refer to Figure 6-4.Which of the following statements is true about the price elasticity of demand? A) The elasticity coefficient is constant along the demand curve. B) The elastic portion of a straight-line downward sloping demand curve corresponds to the segment above the midpoint. C) The inelastic portion of the demand curve corresponds to the segment above the midpoint. D) At the midpoint of the demand curve, the elasticity coefficient is zero.

Figure 6-4 -Refer to Figure 6-4.The inelastic segment of the demand curve A) is coincident with the horizontal axis. B) is coincident with the vertical axis. C) lies below the midpoint of the curve. D) lies above the midpoint of the curve.

Figure 6-4 -Refer to Figure 6-4.At the midpoint of the demand curve,in absolute value A) the price elasticity coefficient is at a maximum. B) the price elasticity coefficient is at a minimum. C) the price elasticity coefficient is zero. D) the price elasticity coefficient is one.

Which of the following statements is true about the price elasticity of demand along a downward sloping linear demand curve? A) It is inelastic at high prices and elastic at low prices. B) It is unit-elastic throughout the demand curve. C) It is elastic at high prices and inelastic at low prices. D) It is perfectly elastic at very high prices and perfectly inelastic at very low prices.

If,for a given percentage increase in price,quantity demanded falls by a proportionately smaller percentage,then demand is A) unit-elastic. B) perfectly elastic. C) relatively inelastic. D) relatively elastic.

If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded,then the demand for golf balls is A) unit-elastic. B) perfectly elastic. C) relatively inelastic. D) relatively elastic.

Facing stiff competition,Hendrix College,a small liberal arts institution in Conway,Ark.,decided two years ago to bolster its academic offerings,promising students at least three hands-on experiences outside the classroom,including research,internships and service projects.Although it raised tuition and fees by 29 percent,enrollment in the freshman class rose by 37 percent. Source: Jonathan D.Glater and Alan Finder,"In New Twist on Tuition Game,Popularity Rises With the Price," New York Times,December 12,2006 Based on the information above,the demand for Hendrix College education is A) unit-elastic. B) perfectly elastic. C) relatively inelastic. D) More information is needed to answer the question.

If the demand for a life-saving drug was perfectly inelastic and the price doubled,the quantity demanded would A) also double. B) decrease by 50%. C) be cut in half. D) remain constant.

At a price of $100,Beachside Canoe Rentals rented 11 canoes.When it increased its rental price to $125,9 canoes were rented.Calculate the absolute value of the price elasticity of demand for canoe rentals,using the midpoint formula. A) 2 B) 1.25 C) 0.9 D) 0.75

Consider the following types of demand curves: a.a vertical demand curve B)a horizontal demand curve C)a linear downward-sloping demand curve Which of the demand curves listed exhibits a price elasticity of demand coefficient that remains constant along the demand curve? A) a only B) b only C) a and b only D) a, b, and c

If at a price of $24,Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids,the demand for her orchids is A) elastic. B) inelastic. C) unit-elastic. D) perfectly elastic.

If at a price of $50,Ghani sells 20 hand-made leather cell-phone covers but at a price of $60,zero units are sold.Based on this information,the demand for his cell-phone covers is A) elastic or perfectly inelastic. B) elastic or perfectly elastic. C) unit-elastic. D) perfectly inelastic.

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

For consumers who opt to pay a $10 monthly fee to have unlimited texting on their cell phones,but choose not to pay a $5 monthly fee to have unlimited call minutes,the unlimited texting option has a ________ than the unlimited minutes option. A) higher price elasticity of demand B) higher cross-price elasticity of demand C) lower price elasticity of demand D) lower cross-price elasticity of demand

Economists use the concept of ________ to measure how one economic variable,such as quantity,responds to a change in another economic variable,such as price. A) slope B) efficiency C) relativity D) elasticity

The price elasticity of demand is equal to A) the value of the slope of the demand curve. B) the change in quantity demanded divided by the change in price. C) the percentage change in price divided by the percentage change in quantity demanded. D) the percentage change in quantity demanded divided by the percentage change in price.

In September 2012,the average price of gasoline in the United States was $3.91 per gallon,and consumers purchased nearly 5 percent less gasoline than they had during September 2011,when the average price of gasoline was $3.66 per gallon.Based on these figures,from September 2011 to September 2012,the demand for gasoline was A) elastic. B) inelastic. C) unit elastic. D) perfectly elastic.

To calculate the price elasticity of demand we divide A) the percentage change in quantity demanded by the percentage change in price. B) the percentage change in price by the percentage change in quantity demanded. C) rise by the run. D) the average price by the average quantity demanded.

The slope of a demand curve is not used to measure the price elasticity of demand because A) the slope of a linear demand curve is not constant. B) the slope of a line cannot have a negative value. C) the measurement of slope is sensitive to the units chosen for price and quantity. D) the slope of the demand curve does not tell us how much quantity changes as price changes.

If the slope of a demand curve is equal to -0.1 then A) demand is inelastic. B) we don't know whether the demand is elastic or inelastic. C) the demand is elastic at low prices and inelastic at high prices. D) as price increases by 10 percent quantity demanded decreases by 1 percent.

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 percent increase in the price of beef,holding every thing else constant,will cause the quantity of beef demanded to A) decrease by 12 percent. B) decrease by 26 percent. C) decrease by 32 percent. D) decrease by 60 percent.

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then A) aspirin is a normal good. B) the demand for aspirin is inelastic. C) aspirin has few substitutes. D) the demand for aspirin is elastic.

If demand is perfectly elastic,the absolute value of the price elasticity coefficient is A) infinity. B) zero. C) more than one. D) equal to the absolute value of the slope of the demand curve.

When the price of tortilla chips rose by 10 percent,the quantity of tortilla chips sold fell 4 percent.This indicates that the demand for tortilla chips is A) inelastic. B) elastic. C) unit-elastic. D) perfectly inelastic.

A linear downward sloping demand curve has price elasticities (in absolute values)that A) increase as price decreases. B) remain constant along the demand curve. C) decrease as price decreases. D) are greater than or equal to 1.

Carrie Bradshaw claims that when it comes to buying shoes,"price is no object." If this is true,then her demand for shoes is A) perfectly elastic. B) perfectly inelastic. C) unit-elastic. D) horizontal.

If the price elasticity of demand for insulin is equal to zero then the demand curve for insulin is A) horizontal. B) downward sloping. C) curvilinear. D) vertical.

Figure 6-5 -Refer to Figure 6-5.The section of the demand curve labeled "A" represents A) the inelastic section of the demand curve. B) the unit-elastic section of the demand curve. C) the elastic section of the demand curve. D) the perfectly elastic section of the demand curve.

If the demand for iPods is price elastic,then A) the percentage change in quantity demanded is greater than the percentage change in price (in absolute value). B) the percentage change in quantity demanded is less than the percentage change in price (in absolute value). C) the percentage change in quantity demanded is equal to the percentage change in price. D) quantity demanded is not responsive to changes in price.

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

If the demand for cell phone service is inelastic,then A) the percentage change in quantity demanded is greater than the percentage change in price (in absolute value). B) the percentage change in quantity demanded is equal to the percentage change in price. C) the quantity demanded does not change in response to changes in price. D) the percentage change in quantity demanded is less than the percentage change in price (in absolute value).

Figure 6-6 -Refer to Figure 6-6.As price falls from P_A to P_B,the quantity demanded increases most along D_1; therefore, A) D₁ is unit elastic. B) D₁ is more inelastic than D₂ or D₃. C) D₁ is more elastic than D₂ or D₃ D) D₁ is elastic at P_A but inelastic at P_B.

The midpoint formula is used to measure the elasticity of demand between two points on a demand curve A) when demand is elastic. B) in special cases when the percentage change in the quantity demanded is equal to the percentage change in price. C) to ensure that the elasticity has a negative value. D) to ensure that we have only one value of the price elasticity of demand between two points on a demand curve.

When the price of pistachio nuts is $7.50 per lb.the quantity demanded is 48 lbs.When the price of peaches is $9.00 per lb.the quantity demanded is 40 lbs.When the midpoint formula is used to measure the price elasticity of demand we can say that the demand for pistachio nuts is A) relatively, but not perfectly, elastic. B) unit-elastic. C) completely inelastic. D) relatively, but not perfectly, inelastic.

Assume that when the price of cantaloupes is $2.50 the demand for cantaloupes is unit-elastic,and that the demand curve for cantaloupes is linear and downward sloping.If firms lower the price of cantaloupes to $2.00 which of the following statements can be made regarding the price elasticity of demand for cantaloupes? A) The demand for cantaloupes at $2.00 must be inelastic. B) We cannot determine whether the demand for cantaloupes is elastic or inelastic without knowing what the quantity demanded is at each price. C) The demand for cantaloupes at $2.00 must be elastic. D) The demand for cantaloupes at $2.00 must be unit-elastic.

Assume that the demand curve for sunblock is linear and downward sloping.Which of the following statements about the slope of the demand curve for sunblock and the price elasticity of demand for sunblock are true? A) The slope and the price elasticity of demand are constant at all points along the demand curve for sunblock. B) The slope is constant, but the price elasticity of demand is not constant at all points along the demand curve for sunblock. C) The slope is not constant, but the price elasticity of demand is constant at all points along the demand curve for sunblock. D) The slope of the demand curve for sunblock is constant and equal to zero; demand is perfectly inelastic.

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots,then A) the price elasticity of demand for teapots is greater than 1 in absolute value. B) the demand for teapots is unit-elastic. C) the price elasticity of demand for teapots is equal to zero. D) the price elasticity of demand for teapots is less than 1 in absolute value.

We should never assume that an inelastic demand curve is a perfectly inelastic demand curve because A) there has never been evidence of a perfectly inelastic demand curve. B) an inelastic demand curve may be perfectly inelastic at some times but not others. C) perfectly inelastic demand curves are rare. D) an inelastic demand curve may be elastic at high prices.

Table 6-1 -Refer to Table 6-1.Suppose you own a bookstore.You believe that you can sell 40 copies per day of the latest John Grisham novel when the price is $35.You consider lowering the price to $25 and believe this will increase the quantity sold to 50 books per day.Compute the price elasticity of demand using the mid-point formula and these data.Select the correct implication from your work. A) The demand for the John Grisham book is inelastic. Revenue will fall if the price is lowered. B) The demand for the John Grisham book is elastic. Revenue will rise if the price is lowered. C) The demand for the John Grisham book is inelastic. Revenue will rise if the price is lowered. D) The demand for the John Grisham book is elastic. Revenue will fall if the price is lowered.

Of the following,which is the best example of good with a perfectly inelastic demand? A) the demand for tickets in New York City when the Mets or Yankees are in the World Series B) the demand for gasoline C) a diabetic's demand for insulin D) the demand for a college education by a student who has a full scholarship to an Ivy League school

A perfectly elastic demand curve is A) vertical. B) horizontal. C) curvilinear. D) upward sloping.

A newspaper story on the effect of higher milk prices on the market for ice cream contained the following: "As a result [of the increase in milk prices],retail prices for ice cream are up 4 percent from last year....And ice cream consumption is down 3 percent." Source: John Curran,"Ice Cream,They Scream: Milk Fat Costs Drive Up Ice Cream Prices," Associated Press,July 23,2001. Based on the information given,what is the price elasticity of demand for ice cream? A) 0.75 (in absolute value) B) 1.33 (in absolute value) C) 12% D) We do not have enough information to calculate the elasticity.

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50,the quantity demanded falls from 800 to 600 reams per day.Using the midpoint formula,what is the price elasticity of demand (in absolute value)over this range? A) 0.003 B) 0.41 C) 2.43 D) 4

The demand for gasoline is perfectly inelastic because most people need gasoline to drive their cars.

If the demand for a product is elastic,the quantity demanded changes by a larger percentage than the percentage change in price.

If,when price changes by 35 percent,the quantity demanded changes by 7 percent,then the absolute value of the price elasticity of demand is 5.

Suppose at a price of $50,Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and at a price of $40,it sells 25 tickets.Based on this information,the demand for Yoshi's jazz performance is elastic.

If demand is inelastic,the absolute value of the price elasticity coefficient is greater than one.

If the demand for a product is elastic,the quantity demanded changes by a smaller percentage than the percentage change in price.

If the absolute value of the price elasticity of demand for gasoline is 0.5,then a 10 percent increase in the price of gasoline leads to a 0.5 percent decrease in the quantity demanded.

If at a price of $10,a vendor sells 5 units of a product and at a price of $8,6 units are sold,then,using the midpoint formula,the demand for this good is inelastic.

Briefly explain the economic concept of elasticity.

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit elastic?

When is demand perfectly elastic? When is demand perfectly inelastic? What are the values of the price elasticity of demand when demand is perfectly elastic or perfectly inelastic? What do perfectly elastic and perfectly inelastic demand curves look like?

Suppose the price of gasoline in July 2004 averaged $1.35 a gallon and 15 million gallons a day were sold.In October 2004,the price averaged $2.15 a gallon and 14 million gallons were sold.If the demand for gasoline did not shift between these two months,use the midpoint formula to calculate the price elasticity of demand.Indicate whether demand was elastic or inelastic.

The current price of canvas messenger bags is $36 each and sales of the bags equal 400 per week.If the price elasticity of demand is -2.5 and the price changes to $44,how many messenger bags will be sold per week? Use the midpoint formula.

The U.S.government's focus on supply reduction efforts in its "war on drugs" has been relatively unsuccessful at addressing illegal drug use.Some economists believe that a successful anti-drug program must concentrate on reducing demand; for example,through drug education and voluntary treatment programs for addicts. a.Suppose the price elasticity of demand for cocaine is -0.5.What will happen to the equilibrium price,quantity and total revenue from cocaine sales if the government succeeds in its efforts to reduce demand? What is likely to happen to the incentive to sell cocaine? b.Suppose the government continues to concentrate its efforts on supply reduction and is able to reduce the supply of cocaine.As a result of the reduction in supply the price of cocaine increases by 25 percent.If the price elasticity of demand is -0.5,what is likely to happen to the incentive to sell cocaine? c.Based on your answers,explain why one approach might be preferred over the other.

Which of the following products comes closest to having a perfectly inelastic demand? A) gasoline B) cholesterol medication in general C) iPhones D) bus rides

Which of the following statements about the price elasticity of demand is correct? A) The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. B) The absolute value of the elasticity of demand ranges from zero to one. C) Demand is more elastic in the long run than it is in the short run. D) Demand is more elastic the smaller the percentage of the consumer's budget the item takes up.

When there few close substitutes available for a good,demand tends to be A) perfectly inelastic. B) perfectly elastic. C) relatively inelastic. D) relatively elastic.

Jonah lives in a small town where there is only one Mexican restaurant.Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant? A) Demand is likely to be perfectly inelastic. B) Demand is likely to be perfectly elastic. C) Demand is likely to be relatively elastic. D) Demand is likely to be relatively inelastic.

A demand curve that is horizontal indicates that the commodity A) has few substitutes. B) must be very cheap. C) is a necessity. D) has a large number of substitutes.

Which of the following goods would have the most inelastic demand? A) ski vacations B) bread C) luxury cars D) big screen TVs

The demand for all carbonated beverages is likely to be ________ the demand for Dr.Pepper. A) more elastic than B) perfectly elastic compared to C) less elastic than D) perfectly inelastic compared to

The demand for gasoline in the short run is A) elastic because people can easily switch to public transportation. B) perfectly inelastic because people have no choice but to buy gasoline. C) unit-elastic because people tend to consume a stable amount of gasoline per period. D) inelastic because there are no good substitutes for gasoline.

According to an article in the Wall Street Journal,unlike airlines,even elite hotels don't have sophisticated systems that can react quickly to changes in demand.Even if they could,many hoteliers say people don't respond that much to lower rates."We've tested this,cutting our rates by $50 [per night],and we didn't see an appreciable response in occupancy," says Jim Schultenover,a vice president for Ritz-Carlton. Source: Jesse Drucker,"In Times of Belt-Tightening,We Seek Reasonable Rates," Wall Street Journal,April 6,2001. Based on the information above,the demand for hotel rooms is A) elastic. B) unit-elastic. C) inelastic. D) perfectly elastic.

According to a study of the price elasticities of products sold in supermarkets,the price elasticity of demand for toothpaste is estimated at -0.45.Which of the following could explain why the price elasticity of demand for toothpaste is so low? A) The toothpaste industry is highly competitive. B) Toothpaste is relatively inexpensive. C) Toothpaste is heavily endorsed by dentists. D) There are few close substitutes for toothpaste.

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because A) buyers of steel are more sensitive to a price change if they have more time to adjust to the price change. B) buyers of steel are less sensitive to a price change if they have more time to adjust to the price change. C) sales revenue in the building industry will fall sharply. D) profits will fall by a greater amount in the long run than in the short run.

With the increased usage of cell phone services,what has happened to the price elasticity of demand for land-line telephone services? A) It has become more price inelastic. B) It has become more price elastic. C) It has become more income elastic. D) The absolute value of the price elasticity coefficient has probably gone down.

Which of the following would result in a higher absolute value of the price elasticity of demand for a product? A) A wide variety of substitutes are available for the good. B) The time period under consideration is short. C) The good is a necessity. D) The expenditure on the good is small relative to one's budget.

If the market for a product is broadly defined,then A) the good has many complements. B) there are few substitutes for the product and the demand for the product is relatively inelastic. C) there are many substitutes for the product and the demand for the product is relatively elastic. D) the expenditure on the good is likely to make up a large share of one's budget.

Rank these three items in terms of the elasticity of the demand for them at any given price,from most elastic to least elastic: hot beverages,coffee and Peet's Coffee. A) hot beverages, coffee, Peet's Coffee B) Peet's Coffee, coffee, hot beverages C) coffee, Peet's Coffee, hot beverages D) coffee, hot beverages, Peet's Coffee

The larger the share of a good in a consumer's budget,holding everything else constant,the A) more price elastic is a consumer's demand. B) more vertical is a consumer's demand curve. C) more price inelastic is a consumer's demand. D) more unit-elastic is a consumer's demand.

The most important determinant of the price elasticity of demand for a good is A) the definition of the market for a good. B) the availability of substitutes for the good. C) the share of the good in the consumer's budget. D) whether the good is a necessity or a luxury.

Which of the following statements is true? A) In general, if a product has few substitutes it will have an elastic demand. B) The more time that passes the more inelastic the demand for a product becomes. C) The demand curve for a necessity is more elastic than the demand curve for a luxury. D) The more narrowly we define a market, the more elastic the demand for a product will be.

Which of the following is not a determinant of a good's price elasticity of demand? A) the slope of the demand curve B) the share of the good in the consumer's total budget C) whether the good is a luxury or a necessity D) the passage of time

If the absolute value of the price elasticity of demand for DVD movies is 0.8 then the elasticity of demand for the DVD for the movie The Hangover should be A) less then 0.8 in absolute value. B) greater than 0.8 in absolute value. C) equal to 1 in absolute value. D) equal to zero because the DVD of this movie has been out for several years.

Holding everything else constant,the demand for a good tends to be more elastic A) the more substitutes there are for the good. B) the shorter the time period involved. C) the more consumers perceive the good to be a necessity. D) the less important the product is in consumers' budgets.

Holding everything else constant,the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes. A) less than B) equal to C) twice as great as D) greater than

Which of the following could explain why the demand for table salt is inelastic? A) Salt is a luxury good. B) Salt is a rare commodity. C) Households devote a very small portion of their income to salt purchases. D) Salt is a luxury for high income consumers but a necessity for low income consumers.

Economist Jerry Hausman estimated the price elasticity of demand for breakfast cereal.He found that A) the price elasticity for a particular brand of raisin bran was the same as the elasticity of demand for all family cereals. B) the price elasticity of demand for Post Raisin Bran is less than the price elasticity of demand for Kellogg's Raisin Bran. C) the price elasticity of all family breakfast cereals is greater than the price elasticity of demand for Post Raisin Bran or Kellogg's Raisin Bran. D) the price elasticity of demand for a particular brand of raisin bran was larger in absolute value than the elasticity for all family cereals.

Economist Jerry Hausman estimated the price elasticity of demand for "Post Raisin Bran" and "All types of breakfast cereals." He found that the price elasticity of demand for Post Raisin Bran was -2.5 and the price elasticity of demand for "All types of breakfast cereals" was -0.9.Which of the following can be implied from Hausman's estimates? A) The demand for "All types of breakfast cereals" is elastic. B) A 1 percent increase in the price of Post Raisin Bran will lead to a 25 percent decrease in the quantity demanded of Post Raisin Bran. C) The demand for Post Raisin Bran is more elastic than the demand for "All types of breakfast cereals." D) A 1 percent decrease in the price of breakfast cereals will lead to a 2.5 percent increase in the quantity demanded of Post Raisin Bran.

Most people buy salt infrequently and in small quantities.Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded.Therefore A) the demand for salt will be perfectly inelastic. B) salt is a normal good. C) the demand for salt is relatively inelastic. D) the price elasticity of demand for salt is greater than 1 (in absolute value).

Table 6-2 -Refer to Table 6-2.Assume that an economist has estimated the price elasticity of demand values in the table above.Use the data in the table to select the correct statement. A) The demand for Coca-Cola is inelastic. B) The elasticity for "All soft drinks" is less than the elasticity for Coca-Cola because Coca-Cola is more of a luxury than a necessity; "All soft drinks" represent goods that are more necessity than luxury. C) The difference in elasticity values is explained by the fact that the more narrowly we define a market the more elastic the demand will be. D) There are fewer substitutes for "All carbonated soft drinks" than there are for "All soft drinks."

In general,a "big ticket item" such as a house or new car will A) tend to have a more elastic demand than a lower priced good. B) tend to have an inelastic demand because spending on the item takes up a large share of the average consumer's budget. C) tend to have an inelastic demand because it has many substitutes. D) tend to have a more inelastic demand the more time that passes.

Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic.She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor.If I wanted to buy a mystery novel I would have many authors to choose from.Therefore,the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct? A) The demand for the textbook is more inelastic, but Jill's reasoning is incorrect. The reason the textbook has an inelastic demand is that it is more expensive than any novel. B) She is correct. C) She is confused. She should have concluded that the textbook has a more elastic demand than a novel. D) She is correct that the textbook has a more inelastic demand, but that is because most students pay for their textbooks with credit or debit cards. Most people pay for novels and other books with cash or by check.

Necessities tend to have more inelastic demands than luxuries.

When there are few substitutes available for a good,demand tends to be relatively inelastic.

If the market for a product is narrowly defined,then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

The demand for The Federalist Papers is likely to be more elastic than the demand for a best-selling mystery novel.

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

The price elasticity of demand for Kellogg's Raisin Bran is larger in absolute value than the price elasticity for all breakfast cereals.

List the five key determinants of price elasticity of demand and explain how each determinant indicates if demand tends to be elastic or inelastic.

For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value). a.Insulin for a diabetic or aspirin for someone suffering a headache. b.A new Whirlpool 27 cu.ft.side-by-side refrigerator or electricity to power your all-electric home. c.A can of Red Bull or soft drinks in general.

For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value). a.Blood pressure medicine for someone who has high blood pressure and the purchase of Clairol hair coloring product. b.A new Ford Fusion or a tank of gas for your current car. c.A Seiko watch or watches in general.

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.

Total revenue equals A) price per unit times quantity sold. B) price per unit times quantity supplied. C) price per unit times change in quantity sold. D) change in price per unit times quantity sold.

When demand is elastic,a fall in price causes total revenue to rise because A) when price falls, quantity sold increases so total revenue automatically rises. B) the increase in quantity sold is large enough to offset the lower price. C) the percentage increase in quantity demanded is less than the percentage fall in price. D) the demand curve shifts.

When demand is unit-elastic,a change in price causes total revenue to stay the same because A) the percentage change in quantity demanded exactly offsets the percentage change in price. B) buyers are buying the same quantity. C) total revenue never changes with price changes. D) the change in profit is offset by the change in production cost.

If a firm lowered the price of the product it sells and found that total revenue did not change,then the demand for its product is A) perfectly inelastic. B) perfectly elastic. C) unit-elastic. D) relatively elastic.

If a firm wanted to know whether the demand for its product was elastic,unit-elastic,or inelastic,then the firm could A) survey competitors and ask them what they think demand elasticity is for the product. B) talk to its customers. C) change price a little bit and observe what happens to total revenue. D) not do anything as there is no way to find an elasticity value.

A service station owner in Staten Island,New York,was worried that raising the price of gasoline would cause the quantity demanded to fall by so much that he would be in a worse situation than if he did not raise the price.If raising the price of gasoline would cause the owner to receive less total revenue from the sale of gasoline,the demand for gasoline is A) elastic. B) inelastic. C) unit elastic. D) perfectly inelastic.

Table 6-3 -Refer to Table 6-3.Over what range of prices is the demand elastic? A) over the entire range of prices B) between $14 and $16 C) between $8 and $16 D) between $2 and $8

Table 6-3 -Refer to Table 6-3.Over what range of prices is the demand inelastic? A) over the entire range of prices B) between $12 and $16 C) between $8 and $16 D) between $2 and $8

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

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises? A) It falls by 162 percent. B) It rises by 1.62 percent. C) It falls. D) It rises.

Suppose a decrease in the supply of bottled water results in a decrease in revenue.This indicates that A) the demand for bottled water is inelastic in the price range considered. B) the demand for bottled water is elastic in the price range considered. C) the supply of bottled water is inelastic in the price range considered. D) the supply of bottled water is elastic in the price range considered.

Suppose a decrease in the supply of wheat results in an increase in revenue.This indicates that A) the decrease in quantity sold is proportionately larger than the resulting change in price. B) the resulting increase in price is proportionately greater than decrease in quantity sold. C) the demand curve for wheat must be vertical. D) the supply curve for wheat must be vertical.

Suppose the demand for milk is relatively inelastic.What happens to sales revenue if the government imposes a price floor above the free market equilibrium price in the market for milk? A) Sales revenue falls. B) Sales revenue rises. C) Sales revenue remains unchanged. D) It cannot be determined without information on prices.

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? 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.

Table 6-4 The publisher of a magazine gives his staff the following information: He tells the staff, "Our costs are currently $150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to $3.00 per issue. This will result in our revenue being exactly equal to our cost." -Refer to Table 6-4.Which of the following statements is correct? A) The publisher's analysis is correct only if the demand is perfectly elastic. B) The publisher's analysis is correct only if the demand is elastic. C) The publisher's analysis is correct only if the demand is perfectly inelastic. D) The publisher's analysis is correct only if the demand is unit-elastic.

An article in the Wall Street Journal noted the following: Instead of relying on a full-coach,round-trip unrestricted fare of about $2,000 between Cleveland and Los Angeles ...Continental [Airlines] since June has offered a $716 unrestricted fare in that market ....Through October,the test resulted in about the same revenue that Continental thinks it would have collected with its higher fare. Source: Scott McCartney,"Airlines Try Cutting Business Fares,Find They Don't Lose Revenue," Wall Street Journal,November 22,2002. What is the absolute value of the price elasticity of demand on this airline route? A) 0 B) less than 1 C) greater than 1 D) approximately 1

Total revenue is equal to A) the amount of funds earned by a firm minus its costs of production. B) the total quantity sold of a product over a given period of time. C) the price of a product multiplied by the number of units of the product sold. D) the monetary value of the capital (for example, plant and equipment) a firm owns.

Which of the following statements is true? A) Whenever a firm raises its price its total revenue will increase. B) When a firm lowers its price its total revenue may either increase or decrease. C) Whenever a firm increases its quantity sold its revenue will increase. D) Total revenue will equal zero when the demand for a product is unit-elastic.

If demand is perfectly inelastic,the absolute value of the price elasticity coefficient is A) infinity. B) zero. C) more than one. D) equal to the absolute value of the slope of the demand curve.

If a firm raised its price and discovered that its total revenue fell,then the demand for its product is A) perfectly inelastic. B) relatively inelastic. C) perfectly elastic. D) relatively elastic.

Table 6-5 -Refer to Table 6-5.Katie Graham owns a kayak rental service in Santa Barbara.Table 6.3 below shows her estimated demand schedule for kayak rentals per week.She would like to increase her sales revenue by changing the price she charges for rentals.At present she charges $75.Based on the information in the table,Katie A) is not able to increase her revenue by changing her price because the demand for kayak rentals is unit-elastic. B) should lower her price to $60 to increase her revenue because the demand for kayak rentals is price elastic. C) should raise her price to $80 to increase her revenue because the demand for kayak rentals is price inelastic. D) should raise her price to earn the most revenue.

Which of the following explains why a firm would be interested in the knowing the price elasticity of demand for a good it sells? A) The price elasticity of demand can be used to determine the impact of changes in income on quantity sold. B) Knowing the price elasticity of demand allows the firm to determine how the cost of producing additional units of the good will change. C) Knowing the price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total profit. D) The price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total revenue.

Opera Estate Girls' School is considering increasing its tuition to raise revenue.If the school believes that raising tuition will increase revenue A) it is assuming that the demand for attending the school is inelastic. B) it is assuming that the demand for attending the school is elastic. C) it is assuming that the demand for attending the school is unit-elastic. D) it is assuming that the demand for attending the school is perfectly elastic.

Along a downward sloping,linear demand curve,total revenue is the greatest A) where demand is normal. B) where demand is the most inelastic. C) where demand is the most elastic. D) where demand is unit-elastic.

Figure 6-7 -Refer to Figure 6-7.Between points a and b on the demand curve,demand is A) perfectly inelastic. B) unit-elastic. C) perfectly elastic. D) elastic.

In September 2012,the average price of gasoline in the United States was $3.91 per gallon,and consumers purchased nearly 5 percent less gasoline than they had during September 2011,when the average price of gasoline was $3.66 per gallon.Based on these figures,when the price of gasoline rose from $3.66 per gallon to $3.91 per gallon,total revenue A) increased. B) decreased. C) did not change. D) There is not enough information to determine what happened to total revenue.

Assume that the market for barley is in equilibrium and the demand for barley is inelastic.Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley.The drought will cause farm revenue to A) rise because there will be a shortage of barley. B) rise because the percentage decrease in quantity sold is less than the percentage increase in price. C) rise because the percentage increase in quantity sold is greater than the percentage increase in price. D) fall because of the decrease in the quantity of barley sold.

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 percent.However,your revenue falls.What does this indicate about the demand for your boutique hotel rooms? A) Boutique hotel rooms are inferior goods. B) Demand is inelastic. C) The demand curve for your hotel rooms is vertical. D) Demand is elastic.

Suppose when Nablom's Bakery raised the price of its breads by 10 percent,the quantity demanded fell by 15 percent.What was the effect on sales revenue? A) Sales revenue increased. B) Sales revenue remained unchanged. C) Sales revenue decreased. D) It cannot be determined without information on prices.

Suppose at the current price,the demand for copper is estimated at -3.14.What happens to sales revenue if the government imposes a price ceiling below the free market equilibrium price in the copper market? A) Sales revenue falls. B) Sales revenue rises. C) Sales revenue remains unchanged because copper is a necessity for most industries. D) It cannot be determined without information on prices.

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that A) the demand for paper is inelastic. B) the demand for paper is elastic. C) the supply of paper is inelastic. D) the supply of paper is elastic.

Which of the following statements is true? A) If the price of a good is lowered and total revenue decreases, demand is elastic. B) If the price of a good is raised and total revenue does not change, demand is perfectly elastic. C) If the price of a good is raised and total revenue increases, demand is inelastic. D) If the price of a good is lowered and total revenue increases, demand is inelastic.

Which of the following correctly comments on the following statement? "The only way to increase the revenue from selling a product is to increase the product's price." A) It is not true. Revenue will increase as the price of the product increases only if demand is elastic. B) This statement is not true. Revenue will increase as the price of the product increases only if demand is inelastic. C) The statement is true. D) This statement is not true. Revenue will decrease as the price of the product increases because quantity demanded will fall.

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be A) inelastic. B) elastic. C) unit elastic. D) perfectly elastic.

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,then an increase in tolls will result in A) a decrease in total revenue. B) a decrease in non-toll road usage. C) an increase in total revenue. D) an increase in toll road usage.

Refer to the Article Summary.The idea that sports teams could charge more for tickets and still increase revenue indicates that tickets are being priced in the ________ portion of their demand curve. A) elastic B) inelastic C) unit elastic D) perfectly elastic

Refer to the Article Summary.How would sports teams know if they were operating on the elastic portion of the demand curve for tickets? A) If they increased ticket prices and the total revenue from ticket sales increased. B) If they increased ticket prices and the total revenue from ticket sales did not change. C) If they increased ticket prices and the total revenue from ticket sales decreased. D) If they decreased ticket prices and the total revenue from ticket sales did not change.

If a firm's goal is to maximize revenue,it will price its product to correspond to the unit-elastic segment of its demand curve.

When Audrina raised the price of her home made cookies,her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

If the price elasticity of demand is unit-elastic,a 10 percent increase in price will result in a 10 percent increase in revenue.

If demand for a product is perfectly inelastic a change in price will not change total revenue.

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1.Increasing ticket prices will increase the total revenue from ticket sales.

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

You are the manager of a theater.At present the theater charges the same admission price of $8 to all customers,regardless of age.You propose a two-tier pricing scheme: $5 for children under the age of 12 and $10 for adults.You tell your supervisor that your proposal is likely to increase revenues.What must be true about the price elasticity of demand if your proposal is to achieve its goal of raising revenue? Explain your answer.

Suppose that at a price of $55,100 units were sold while at a price of $33,153 units were sold.Without calculating the price elasticity value,can you determine whether demand is elastic,unit-elastic,or inelastic? Explain your answer.

The Mass Rapid Transit (MRT)System in Hong Kong has been running significant losses.Transport Ministry officials have argued over whether to raise fares to combat the losses.One argument against a fare increase is that it will aggravate traffic congestion on the streets during peak commuter hours.Suppose that the current fare is $4 and the government is considering raising it to $6.Officials estimate that this reduces the number of rides purchased from 10,000 to 8,000 per day. a.What is the estimated elasticity of demand for MRT rides? b.What does this elasticity of demand suggest to you about what will happen to total revenue earned by the transit system? c.Last year,the MRT system incurred a loss of $50,000 per day.Do you think the fare increase will resolve the deficit problem as well as Ministry officials anticipate? Explain.

Ali's Gyros operates near a college campus.Ali has been selling 120 gyros a day at $4.50 each and is considering a price cut.He estimates that he would be able to sell 200 gyros per day at $3.50 each. a.Calculate the price elasticity of demand using the midpoint formula. b.Calculate the change in revenue as a result of the price cut.

Suppose the governor of California has proposed increasing toll rates on California's toll roads,and has presented two possible scenarios to implement these increases.Following are projected data for the two scenarios for the California toll roads: Scenario 1: Toll rate in 2012: $10.00.Toll rate in 2016: $22.50 For every 100 cars using the toll roads in 2012,only 81.6 cars will use the toll roads in 2016. Scenario 2: Toll rate in 2012: $10.00.Toll rate in 2016: $17.50 For every 100 cars using the toll roads in 2012,only 96.2 cars will use the toll roads in 2016. a.Using the midpoint formula,calculate the price elasticity of demand for Scenario 1 and Scenario 2. b.Assume 10,000 cars use California toll roads every day in 2012.What would be the daily total revenue received for each scenario in 2012 and in 2016? c.Is demand under Scenario 1 and under Scenario 2 price elastic,inelastic,or unit elastic.Briefly explain. (For above questions,assume that nothing other than the toll change occurs during the time frame listed that would affect consumer demand.)

Income elasticity measures A) how a good's quantity demanded responds to change in the goods price. B) how a good's quantity demanded responds to change in the price of another good. C) how a good's quantity demanded responds to change in buyers' incomes. D) how a good's quantity demanded responds to producers' incomes.

Calculate the income elasticity if an 8 percent increase in income leads to a 4 percent increase in quantity demanded for organic produce. A) -0.66 B) 0.5 C) 1.5 D) 2

Studies show that the income elasticity of demand for wine is approximately five.What does this mean? A) A 1 percent decrease in the price of wine leads to a 5 percent increase in wine consumption. B) A 1 percent increase in income leads to a 5 percent increase in wine consumption. C) A 5 percent increase in income leads to a 1 percent increase in wine consumption. D) Wine is a relatively elastic good.

Which of the following items is likely to have the highest income elasticity of demand? A) a bus ride B) a meal at Taco Bell C) a vacation home in the Swiss Alps D) a tank of gasoline

If you expect the economy is going to boom and average income in the economy will rise in the foreseeable future,the type of firm that would be able to increase its sales if your expectations are met is A) one that sells an inferior good. B) one that sells a necessity good. C) one that sells a luxury good. D) one that sells a price inelastic good.

Last year,Sefton purchased 60 pounds of potatoes to feed his family of five when his household income was $30,000.This year,his household income fell to $20,000 and Sefton purchased 80 pounds of potatoes.All else constant,Sefton's income elasticity of demand for potatoes is A) negative, so Sefton considers potatoes to be an inferior good. B) positive, so Sefton considers potatoes to be an inferior good. C) positive, so Sefton considers potatoes to be a normal good and a necessity. D) negative, so Sefton considers potatoes to be a normal good.

According to a study of the U.S.demand for alcoholic beverages,the price elasticity of demand for beer is -0.30.Which of the following could explain why the price elasticity of demand for beer is low? A) Beer is an inferior alcoholic beverage. B) More and more people are switching to wine and cocktails rather than beer. C) The price of beer is relatively low and for many people it is a habit forming product. D) There are only a few major suppliers of beer.

Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09.This means that A) an increase in the price of beer will increase the quantity demanded of beer and beer is a normal good. B) an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is a normal good. C) a decrease in the price of beer will lead to an increase in revenue for beer sellers and beer is an inferior good. D) an increase in the price of beer will lead to a decrease in the quantity demanded of beer and beer is a necessity.

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? 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.

Linesha,a college student working part-time receives a wage increase.An avid movie buff,she increased her purchases of Blu-ray discs and reduced her purchases of DVDs.Based on this information A) DVDs and Blu-ray discs are substitutes. B) Blu-ray discs are normal goods and DVDs are inferior goods. C) DVDs and Blu-ray discs are normal goods. D) the cross-price elasticity between DVDs and Blu-ray discs is negative.

Cross-price elasticity of demand is calculated as the A) percentage change in quantity demanded divided by percentage change in price of a good. B) percentage change in quantity demanded of one good divided by percentage change in price of a different good. C) percentage change in quantity sold divided by percentage change in buyers' incomes. D) percentage change in quantity supplied divided by percentage change in price of a good.

If the cross-price elasticity of demand for computers and software is negative,this means the two goods are A) substitutes. B) complements. C) inferior. D) normal.

Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result,CineArts Videos experienced a 16 percent decline in its movie club membership.What is the value of the cross-price elasticity between the two movie club memberships? A) -1.6 B) -0.625 C) 0.625 D) 1.6

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 negative cross-price elasticity? A) a and b only B) c and d only C) e only D) a, b, and c only

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 cross-price elasticity of zero? A) a and b only B) c only since most people cannot do without computers C) e only D) none of the pairs listed

Suppose the cross-price elasticity of demand between grapefruit juice and orange juice is approximately 6.What does this mean? A) A 1 percent decrease in the price of grapefruit juice leads to a 6 percent increase in orange juice consumption. B) A 6 percent increase in the price of grapefruit juice leads to a 1 percent increase in orange juice consumption. C) If the price of grapefruit juice rises by $1, 6 more cartons of orange juice will be purchased. D) The demand for orange juice is 6 times more than the demand for grapefruit juice.

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

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

In September 2006,the Food and Drug Administration recommended that Americans avoid eating bagged raw spinach in the wake of an outbreak of E.coli bacteria.Following this recommendation,the food industry looked at alternatives and many turned to arugula.One Chicago distributor claimed,"The sale of the stuff has gone through the roof." Based on this information A) arugula is a normal good while raw spinach is an inferior good. B) the cross-price elasticity between arugula and spinach is negative. C) the cross-price elasticity between arugula and spinach is positive D) the price elasticity of arugula is positive while the price elasticity of spinach falls to zero.

For people who live near a bus route,a subway station,or a commuter rail line,public transportation provides a substitute to driving their own cars.So,for these people,the cross-price elasticity of demand between gasoline and public transportation is A) positive. B) negative. C) zero. D) infinity.

If a firm is in an antitrust court case being accused of monopolizing a product,the firm would hire an economist to show A) the cross-price elasticity of demand between the firm's good and another is negative. B) the cross-price elasticity of demand between the firm's good and another is positive. C) the price elasticity of demand for the firm's good is highly inelastic. D) the income elasticity of the firm's good is inferior.

Suppose the California Nurses Union successfully secured a 12 percent increase in the wages of registered nurses.If a hospital responds by reducing the quantity of registered nurses hired and increasing the quantity of physician's assistants hired,what conclusion can you draw? A) Physician's assistants are more valuable in terms of their productivity. B) The price elasticity of demand for registered nurses is negative while the price elasticity of demand for physician's assistants is positive. C) The cross-price elasticity of demand between registered nurses and physician's assistants is positive. D) The cross-price elasticity of demand between registered nurses and physician's assistants is negative.

If the cross-price elasticity of demand between Breeze Detergent and Faber Detergent is a relatively large positive number,then it indicates that A) the two brands are probably made by the same company. B) the two brands of detergent are close substitutes. C) consumers have a distinct preference for one brand versus the other. D) detergents are necessities.

The cross-price elasticity of demand between an unlimited texting option and an unlimited call minutes option offered from a cell phone provider would be A) positive if subscribers consider the services substitutes for each other. B) positive if subscribers consider the services complements to each other. C) negative if subscribers consider the services substitutes for each other. D) negative no matter if subscribers consider the services substitutes or complements for each other.

The income elasticity of demand measures A) the responsiveness of quantity demanded to changes in income. B) how a consumer's purchasing power is affected by a change in the price of a product. C) the percentage change in the price of a product divided by the percentage change in consumer income. D) the income effect of a change in price.

If a good has a negative income elasticity of demand,this indicates that the good is A) a substitute with another good. B) a complement with another good. C) inferior. D) normal.

If a 5 percent increase in income leads to a 10 percent increase in quantity demanded for airline travel,then airline travel is A) a necessity. B) a substitute for another good. C) a luxury. D) an inferior good.

If a 6 percent increase in income leads to a 4 percent increase in quantity demanded for audio books the income elasticity of demand is A) -0.67. B) 0.67. C) 1.5. D) 2.

If a 5 percent increase in income leads to a 10 percent decrease in quantity demanded for a product this product is A) an income elastic good. B) an inferior good. C) a necessity. D) a luxury good.

If the quantity demanded for a good rises as income rises then the income elasticity of demand for this good is ________ than 0,and the good is ________ good. A) greater; an inferior B) less; a normal C) less; an inferior D) greater; a normal

Demand for a luxury item,such as a yacht,is likely to be A) both income and price inelastic. B) both income elastic and price elastic. C) income elastic and price inelastic. D) income inelastic and price elastic.

Figure 6-9 -Refer to Figure 6-9.The data in the diagram indicates that DVDs are A) luxury goods. B) inelastic goods. C) necessities. D) both luxury goods and inelastic goods. E) both necessities and inelastic goods.

Suppose you have surveyed a few industries and obtained information about the income elasticity of demand for their products.If you expect that the economy is headed for a long recession,you would advise people to look for jobs in an industry with A) a high positive income elasticity coefficient such as 5. B) a low positive income elasticity coefficient such as 0.8. C) a "high" negative income elasticity coefficient such as -4. D) a "low" negative income elasticity coefficient such as -0.2.

Last year,Joan bought 50 pounds of hamburger when her household income was $40,000.This year,her household income was only $30,000 and Joan bought 60 pounds of hamburger.Holding everything else constant,Joan's income elasticity of demand for hamburger is A) positive, so Joan considers hamburger to be an inferior good. B) negative, so Joan considers hamburger to be an inferior good. C) positive, so Joan considers hamburger to be a normal good and a necessity. D) negative, so Joan considers hamburger to be a normal good.

Which of the following items is likely to have the highest income elasticity of demand? A) a luxury cruise to several European countries B) water C) breakfast cereal D) a hamburger

Suppose you are considering buying stock in the stock market,and your objective is to maximize your net worth.Furthermore,your study of the market reveals that the economy will be slowing down over the next several months.Under these conditions,it would be best to purchase stock in companies that produce A) normal goods. B) luxury goods. C) inferior goods. D) price elastic goods.

The cross-price elasticity of demand measures the A) absolute change in the quantity demanded of one good divided by the absolute change in the price of another good. B) percentage change in the quantity demanded of one good divided by the percentage change in the price of another good. C) percentage change in the price of one good divided by the percentage change in the quantity demanded of another good. D) percentage change in the quantity demanded of one good in one location divided by the price of the same good in another location.

The cross-price elasticity of demand between Coca-Cola and Pepsi-Cola is calculated by dividing A) the percentage change in quantity demanded of Coca-Cola by the percentage change in the quantity demanded of Pepsi-Cola. B) the percentage change in the price of Pepsi-Cola by the percentage change in quantity demanded of Coca-Cola. C) the percentage change in the price of Coca-Cola by the percentage change in the price of Pepsi-Cola. D) the percentage change in the quantity demanded of Coca-Cola by the percentage change in the price of Pepsi-Cola.

In order to prove that Motrin and Ibuprofen are substitutes,one should measure the ________ and get a ________. A) cross-price elasticity; positive number B) cross-price elasticity; negative number C) price elasticity of demand; number greater than 1 (in absolute value) D) price elasticity of demand; number less than 1 (in absolute value)

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 percent? A) The quantity demanded of the related good rises by 3.4 percent. B) The quantity demanded of the related good falls by 34 percent. C) The quantity demanded of the related good rises by 34 percent. D) The quantity demanded of the related good falls by 3.4 percent.

If the cross-price elasticity of demand between beer and wine is 0.31,then beer and wine are A) complements. B) price inelastic goods. C) substitutes. D) necessities.

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

Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand? A) pancakes and syrup B) hot dogs and hamburgers C) orange juice and grapefruit juice D) peanuts and cat food

When the price of tortilla chips rose by 10 percent,the quantity of tortilla chips sold fell 4 percent,and the sale of dips (like salsa and bean dip)fell 8 percent.This set of facts indicates that A) the cross-price elasticity between tortilla chips and dips is 0.8, so the two are substitutes. B) the cross-price elasticity between tortilla chips and dips is -0.4, so the two are complements. C) the cross-price elasticity between tortilla chips and dips is -0.8, so the two are complements. D) the cross-price elasticity between tortilla chips and dips is 0.4, so the two are substitutes.

Suppose the cross-price elasticity of demand between DVDs at Amazon.com and DVDs at Buy.com is 3.5.Based on this information,predict what happens when Amazon.com lowers its DVD prices by 10 percent. A) The quantity of DVDs demanded on Amazon.com will increase by 35 percent. B) The quantity of DVDs demanded on Buy.com will increase by 35 percent. C) The quantity of DVDs demanded on Amazon.com will decrease by 35 percent. D) The quantity of DVDs demanded on Buy.com will decrease by 35 percent.

During an economic expansion as consumer incomes rise,holding everything else constant, A) the demand for most goods, except luxuries, will rise. B) the demand for luxuries will rise while the demand for inferior goods will fall. C) the demand for luxuries and inferior goods will rise. D) the prices of luxuries will fall while the prices of inferior goods will rise.

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21.This indicates that A) wine and spirits are luxury goods. B) wine is a luxury good and spirits are inferior goods. C) wine and spirits are highly price elastic. D) wine is a luxury good and spirits are necessities.

Barbara,the consummate hostess,proudly announced as she served dessert,"A port is often the perfect end to a meal,sipped with a piece of my scrumptious chocolate cake." Evidently,Barbara views A) port and chocolate cake as luxury items. B) port and chocolate cake as necessities. C) port and chocolate cake as complementary goods. D) port and chocolate cake as substitutes to other desserts.

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03.This means that A) beer and wine are substitutes and wine is an inferior good. B) beer and wine are complements and wine is a luxury good. C) beer and wine are substitutes and wine is a luxury good. D) beer and wine are complements and wine is an inferior good.

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50,the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03.These elasticities mean that A) beer and spirits are complements, spirits and wine are luxuries. B) beer and spirits are normal goods, spirits and wine are luxuries. C) beer and spirits are complements, spirits are substitutes. D) beer and spirits are substitutes, spirits and wine are luxuries.

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

In recent years,the prices of new domestically produced cars have been falling.Suppose consumers respond by reducing their demand for used cars and mass transport services such as bus travel.This information suggests that the cross-price elasticity between new cars and used cars,and the cross-price elasticity between new cars and bus travel are negative.

In the alcohol industry,both wine and spirits are considered to be substitutes for beer.

The absolute value of the price elasticity of demand for telescopes is 1.5.Therefore,telescopes can be classified as a luxury.

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

A recent study indicated that "Stricter college alcohol policies such as raising the price of alcohol,or banning alcohol on campus,decreases the number of students who use marijuana." This indicates that the cross-price elasticity between alcohol and marijuana is positive.

What factors would make you more sensitive or less sensitive to price when purchasing gasoline?

Explain the concepts of cross-price elasticity of demand and income elasticity of demand.What do positive and negative values indicate for each of these demand elasticities ?

Suppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a good.Calculate the income elasticity of demand for the good and determine what type of good it is.

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?

Table 6-6 -Refer to Table 6-6. a.Using the information in the table,calculate the income elasticity of demand for good X and characterize the good.Use the midpoint formula. b.Can you calculate the income elasticity of demand for good Y? If you can,show your calculation and characterize the good.If you cannot,explain why.

Which of the following is one reason why the income of small family farms has decreased over time? A) Technology has increase farm productivity and market supply. B) The demand for farm products is price elastic. C) The demand for farm products is income inelastic. D) The U.S. population has increased greatly since 1950.

Between 1950 and 2013 the number of acres devoted to wheat production in the United States ________ and the price of wheat ________. A) declined; decreased B) more than doubled; increased by about 50 percent C) declined; more than doubled D) increased; more than doubled

The price of wheat has fallen since 1950.Which of the following explains this price decline? A) The price elasticity of demand is less than 1 (in absolute value) and the income elasticity of demand for wheat is low. B) The price elasticity of demand is greater than 1 (in absolute value) and the income elasticity of demand for wheat is low. C) The price elasticity of demand is less than 1 (in absolute value) and wheat is an inferior good. D) The price elasticity of demand is greater than 1 (in absolute value) and the income elasticity of demand for wheat is greater than 1.

The demand for most farm products is relatively inelastic.All else constant,what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases in productivity? A) Farm revenues increase. B) Farm revenues decrease. C) Farm revenues remain constant because consumers will not increase their consumption of farm products by much. D) Farm revenues could increase or decrease depending on the cost of this new equipment.

Suppose a frost destroys the tomato crop in California but farmers see an increase in their revenues.Which of the following best explains this? A) The decrease in supply led to huge price increases. B) Tomatoes are necessities. C) The demand for tomatoes is price inelastic. D) The cross-price elasticity between tomatoes and most other substitute vegetables is very low.

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? 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

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.How much revenue does the federal government receive from the tax? A) $95.44 billion B) $111.20 billion C) $148.27 billion D) $161.61 billion

From 1950 to 2013 the number of people who lived on farms fell from 23 million to fewer than 3 million? Which of the following factors have contributed to this trend? A) increases in the cost of farming and a desire for young adults to move to urban areas B) rapid growth in farm production and low income and price elasticities for food products C) slow growth in agricultural productivity and low income elasticities for food products D) government policies that have increased the cost of living and working on farms

Between 1950 and 2013 the productivity of wheat farmers in the United States more than doubled.This means that A) the amount of land and other resources devoted to wheat production more than doubled. B) the incomes of wheat farmers more than doubled. C) the total amount of wheat produced more than doubled. D) the amount of wheat produced by the average farmer more than doubled.

The paradox of American farming is A) the demand for imported luxury food products has risen as the demand for domestic food products has fallen. B) the demand for food has risen as the number of people who pursue farming as a career has fallen. C) food has become cheaper and more abundant as the number of farms has decreased. D) the amount of food produced has increased as the average farm size has fallen.

Since 1950 there has been a substantial increase in wheat production.The increase in production has led to a decrease in the price of wheat because of which of the following factors? A) The absolute value of the price elasticity of demand for wheat is less than 1 and the income elasticity of demand for wheat is greater than 1. B) The absolute value of the price elasticity of demand for wheat is greater than 1 and wheat is a close substitute for other food products. C) The absolute value of the price elasticity of demand for wheat is less than 1 and the income elasticity of demand for wheat is low. D) The income elasticity of demand for wheat is high and wheat is an inferior good.

Assume that the price elasticity of demand for gasoline is -0.06.If the government tax causes the price of gasoline to increase by 50 percent,what will be the decrease in the quantity of gasoline demanded? A) 0.5 percent B) 3.0 percent C) 8.33 percent D) 50 percent

Assume that a 50 percent gasoline tax led to a large increase in its price and only a small decrease in the quantity of gasoline demanded.Economic analysis would lead one to conclude that A) gasoline should be taxed because the benefits of the tax would exceed the costs. B) gasoline should not be taxed because the benefits are uncertain. C) gasoline should not be taxed on ethical grounds since ethical benefits and costs can't be measured. D) the benefits of taxing gasoline is a normative issue. Economic analysis can be used to contribute to discussion of this issue but cannot decide it.

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.

Most food products have low income and price elasticities of demand.

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.

A study of the effects of the minimum wage on employment of low-skilled workers estimated the price elasticity of demand for low-skilled workers is -0.75.Suppose that the government is considering raising the minimum wage from $7.25 per hour to $7.75 per hour.Based on this information,calculate the percentage change in the employment of low skilled workers.Use the midpoint formula.

Suppose the price elasticity of demand for methamphetamine is -0.35.If decriminalization caused the price of methamphetamine to fall by 75 percent,what will be the percentage increase in the quantity of methamphetamine demanded? If the price elasticity is -3.5,what will be the percentage increase in quantity demanded?

Suppose the price elasticity of demand for cigarettes is -0.4.The FDA decides to regulate tobacco production,which increases the price of cigarettes and causes the quantity of cigarettes demanded to decrease by 25 percent.What is the percentage increase in price which would lead to the 25 percent decrease in quantity demanded? If the price elasticity was -4,what would be the percentage increase in price?

The price elasticity of an upward-sloping supply curve is always A) positive. B) negative. C) greater than one. D) impossible to determine.

Price elasticity of supply is used to gauge A) how responsive suppliers are to price changes. B) how responsive suppliers are to changes in future prices. C) how responsive suppliers are to a change in demand. D) how responsive sales are to a change in input prices.

The price elasticity of supply is equal to A) the value of the slope of the supply curve. B) the change in quantity supplied divided by the change in price. C) the percentage change in price divided by the percentage change in quantity supplied. D) the percentage change in quantity supplied divided by the percentage change in price.

Suppose the value of the price elasticity of supply is 4.What does this mean? A) A 4 percent increase in the price of the good causes quantity supplied to increase by 1 percent. B) A 1 percent increase in the price of the good causes the supply curve to shift upward by 4 percent. C) A 1 percent increase in the price of the good causes quantity supplied to increase by 4 percent. D) For every $1 increase in price, quantity supplied increases by 4 units.

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterize the product. A) 2; The product is elastic. B) 0.2; The product is inelastic. C) 0.5; The product is inelastic. D) 50%; The product is inelastic.

Suppose that the price of a money clip increases from $0.75 to $0.90 and quantity supplied rises from 8,000 units to 10,000 units.Use the midpoint formula to calculate the price elasticity of supply. A) 1.22 B) 1.0 C) 0.82 D) 0.07

Figure 6-10 -Refer to Figure 6-10.The supply curve on which price elasticity changes at every point is shown in A) Panel A. B) Panel B. C) Panel C. D) Panel D.

Figure 6-10 -Refer to Figure 6-10.A perfectly elastic supply curve is shown in A) Panel A. B) Panel B. C) Panel C. D) Panel D.

Figure 6-10 -Refer to Figure 6-10.A perfectly inelastic supply curve is shown in A) Panel A. B) Panel B. C) Panel C. D) Panel D.

Figure 6-10 -Refer to Figure 6-10.A unit-elastic supply curve is shown in A) Panel A. B) Panel B. C) Panel C. D) Panel D.

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula,calculate the approximately change in the quantity supplied of teenage labor. A) 7.3 percent B) 14.4 percent C) 25.5 percent D) There is insufficient information to answer the question.

An increase in the demand for green tea raises the price of apples from $16 a pound to $20 a pound.As a result,quantity supplied increases by 30 percent.Using the midpoint formula,calculate the value of the price elasticity of supply? A) 1.35 B) 1.875 C) 2.22 D) 7.5

Figure 6-11 -Refer to Figure 6-11.What is the value of the price elasticity of supply between g and h? A) 20 percent B) 0.5 C) 2 D) 0.02

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

If,for a given percentage increase in price,quantity supplied increases by a proportionately larger percentage,then supply is A) unit-elastic. B) perfectly elastic. C) relatively inelastic. D) elastic.

If firms do not increase their quantity supplied when price changes,then supply is A) perfectly elastic. B) perfectly inelastic. C) relatively inelastic. D) elastic.

If,for a given percentage decrease in price,quantity supplied decreases by a proportionately smaller percentage,then supply is A) unit-elastic. B) perfectly elastic. C) relatively inelastic. D) elastic.

Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil? A) The elasticity coefficient is likely to be very high and supply is inelastic. B) The elasticity coefficient is likely to be close to zero and supply is perfectly elastic. C) The elasticity coefficient is likely to be low and supply is highly inelastic. D) The elasticity coefficient is likely to be low and supply is highly elastic.

Over longer periods of time,increases in oil prices provide firms with incentives to explore and recover oil.What does this indicate about the long run price elasticity of supply for oil? A) The elasticity coefficient is likely to be higher in the long run than in the short run. B) The elasticity coefficient is likely to be lower in the long run than in the short run. C) The elasticity coefficient approaches 0 in the long run as supplies are depleted. D) The elasticity coefficient is unstable in the long run because oil supplies may be depleted.

Suppose at the going wage rate of $20 per hour,firms can hire as many hours of janitorial services as it desires.If any firm tries to lower the wage rate to $19,it will not be able to hire any janitor.What does this indicate about the supply curve for janitorial services? A) Supply is unit-elastic. B) Supply is perfectly elastic. C) Supply is perfectly inelastic. D) Supply is relatively inelastic.

Suppose the demand curve for a product is represented by a typical downward-sloping curve.Now suppose the demand for this product decreases.Which of the following statements accurately predicts the resulting decrease in price? A) The more elastic the supply curve, the greater the price increase. B) The more elastic the supply curve, the smaller the price decrease. C) The increase in price is not affected by the elasticity of the supply curve. D) The decrease in price will always be proportional to the magnitude of the demand shift.

The price elasticity of supply measures A) the responsiveness of quantity supplied to changes in input prices. B) the responsiveness of quantity supplied to changes in technology. C) the responsiveness of quantity supplied to changes in price. D) a supplier's ability to produce a good in the face of scarcity.

To calculate the price elasticity of supply we divide A) the percentage change in price by the percentage change in quantity supplied. B) the percentage change in quantity supplied by the percentage change in price. C) rise by the run. D) the average price by the average quantity supplied.

Suppose the supply of bicycles is price elastic.This means that A) consumers will respond significantly to an increase in the quantity supplied of bicycles. B) suppliers will increase the quantity supplied of bicycles, but not immediately. C) suppliers face many substitutes for bicycles. D) suppliers will respond significantly to changes in the price of bicycles.

If the quantity supplied of walkie-talkies increases by 5 percent when prices increase by 12 percent,then A) the supply of walkie-talkies is inelastic. B) the supply of walkie-talkies is elastic. C) the walkie-talkie supply curve will shift to the right. D) the walkie-talkie supply curve will shift to the left.

Suppose when the price of jean-jackets increased by 10 percent,the quantity supplied increased by 16 percent.Based on this information the price elasticity of supply of jean-jackets is A) 0.625. B) 6%. C) 1.6. D) 1.6%.

If an 8 percent decrease in the price of lobster leads to a 15 percent decrease in the quantity supplied of lobster,then the supply of lobster is A) unit-elastic. B) unitarily elastic. C) elastic. D) perfectly inelastic.

Inelastic supply occurs whenever the elasticity of supply value is A) negative and < -1. B) any positive number. C) positive and > 1. D) positive and < 1.

If a supply curve is a horizontal line,supply is said to be A) perfectly inelastic. B) unit-elastic. C) inelastic. D) perfectly elastic.

A supply curve that is vertical A) is perfectly elastic. B) is perfectly inelastic. C) is impossible. D) has an elasticity equal to 1.

Table 6-7 The town of Bloomfield is well known for its basketball team. The price of basketball game tickets is determined by market forces. Table 6-7 above shows the demand and supply schedules for basketball games tickets. -Refer to Table 6-7.What is the most distinctive feature of the supply curve? A) The supply curve is perfectly inelastic. B) The supply curve is horizontal. C) The supply curve is upward sloping. D) The supply curve is perfectly elastic.

Table 6-7 The town of Bloomfield is well known for its basketball team. The price of basketball game tickets is determined by market forces. Table 6-7 above shows the demand and supply schedules for basketball games tickets. -Refer to Table 6-7.What is the numerical value of the price elasticity of supply? A) 1 B) greater than 0 but less than 1 C) 0 D) greater than 1

The price elasticity of supply is usually a positive number because A) quantity supplied increases in response to income increases. B) quantity supplied increases in response to price increases. C) the quantity demanded usually rises when price falls and therefore suppliers would want to capitalize on this increase in demand. D) price rises when supply increases.

The price elasticity of supply of hot dog buns is estimated to be 1.5.Holding everything else constant,this means that a 10 percent decrease in the price of hot dog buns will cause the quantity of hot dog buns supplied to decrease by A) 1.5 percent. B) 15 percent. C) approximately 25 percent. D) approximately 5 percent.

Which of the following is a key determinant of the price elasticity of supply? A) the slope of the supply curve B) the availability of substitutes in production C) the available technology D) the time it takes to change output in response to a change in price

Figure 6-12 -Refer to Figure 6-12.Suppose the diagram shows the supply curves for a product in the short run and in the long run.Which supply curve represents supply in the short run and which curve represents supply in the long run? A) S_B represents supply in the short run and S_A represents supply in the long run. B) Either S_A or S_B could represent supply in the short run; in the long run the supply curve must be a vertical line. C) Either S_A or S_B could represent supply in the long run; in the short run the supply curve must be a horizontal line. D) S_A represents supply in the short run and S_B represents supply in the long run.

Figure 6-12 -Refer to Figure 6-12.The diagram shows two supply curves,S_A and S_B.As price rises from P₀ to P₁,which supply curve is more elastic? A) S_A B) S_B C) They are equally inelastic. D) They are equally elastic.

Suppose the demand curve for a product is represented by a typical downward-sloping curve.Now suppose the demand for this product increases.Which of the following statements accurately predicts the resulting increase in price? A) The more elastic the supply curve, the greater the price increase. B) The more elastic the supply curve, the smaller the price increase. C) The increase in price is not affected by the elasticity of the supply curve. D) There will be no increase in price if the supply curve is perfectly inelastic.

Suppose the demand curve for hybrid cars shifts to the right.This will cause a relatively small increase in the price of hybrid cars if A) demand is elastic and supply is inelastic. B) demand is inelastic and supply is elastic. C) both demand and supply are inelastic. D) both demand and supply are elastic.

The process involved in bringing oil to world markets can take years.Substitutes for oil-based products such as gasoline are limited.As a result A) the supply of oil is very elastic and the demand for oil is very elastic over short periods of time. B) the supply of oil is very inelastic and the demand for gasoline is inelastic over short periods of time. C) the supply of oil and the demand for oil shift to the right over short periods of time. D) the supply of oil and the demand for oil are both perfectly elastic over short periods of time.

Shifts in the supply of oil have caused large changes in price since the 1970s because A) the supply of oil is very inelastic while the demand for oil is very elastic over short periods of time. B) the supply of oil is very elastic while the demand for oil is inelastic over short periods of time. C) both the supply of oil and the demand for oil are inelastic over short periods of time. D) the supply of oil and the demand for oil are perfectly elastic over short periods of time.

Which of the following statements is true? A) The supply of oil is very elastic over short time periods but becomes perfectly inelastic over time. A given shift in supply results in a greater increase in the price of oil when the supply of oil is perfectly inelastic. B) The supply of oil is very inelastic over short time periods but becomes more elastic over time. A given shift in supply results in a smaller increase in the price of oil when the supply is more elastic. C) The supply of oil is perfectly inelastic; therefore, as the demand for oil increases over time the price of oil increases significantly. D) Over short periods of time increases in the demand for oil are greater than increases in the supply of oil. Over the long run increases in the demand and the supply of oil are about equal. As a result, the price of oil increases greatly in the short run but is stable in the long run.

The price elasticity of supply is calculated as the change in supply divided by the change in price.

Suppose the supply curve for digital cameras shifts to the right.This will cause a relatively large decrease in the price of digital cameras if both demand and supply are inelastic.

The value of the price elasticity of supply depends primarily on how quickly firms can acquire inputs to increase quantity supplied when price increases.

Supply is elastic whenever the elasticity value for supply is positive and greater than 1.

There are a limited number of original Picasso paintings.This means that the supply of original Picasso paintings is perfectly inelastic.

Explain the economic concept of price elasticity of supply.How is price elasticity of supply calculated?

Suppose the current price of oil is $90 a barrel and the quantity supplied is 800 million barrels per day.If the price elasticity of supply for oil in the short run is estimated at 0.5,use the midpoint formula to calculate the percentage change in quantity supplied when the price of oil rises to $98 a barrel.

Suppose the current price of copper is $3 per pound and the quantity supplied is 200 pounds per day.If the price of copper falls to $2.50 per pound,the quantity supplied drops to 180 pounds per day.Use the midpoint formula to calculate the price elasticity of supply for copper.

For a given demand curve,will there be a greater loss of economic efficiency from a binding price floor when supply is elastic or inelastic? Illustrate your answer with a demand and supply graph.In your graph you must show two supply curves,one elastic and the other inelastic.