Chapter 6 micro

suppose a 4 percent increase in price results to a 2 percent increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product a. .5; the product is inelastic b. 50%; the product is inelastic c. .2; the products is inelastic d. 2; the product is elastic

a. .5; the product is inelastic

consider the following pair 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 cores-price elasticity a. a and b only b. c and d only c. e only d. a, b, and c only

a. a and b only

which of the following items is likely to have the highest income elasticity of demand a. a vacation home in the Swiss alps b. a tank of gasoline c. a meal at taco bell d. a bus ride

a. a vacation home in the Swiss alps

when demand is elastic, a fall in price causes the total revenue to rise because a. the increase in quantity sold is large enough to offset the lower price b. the demand curve shifts c. when price falls, quantity sold increases to total revenue automatically rises d. the percentage increase in quantity demanded is less than the percentage fall in price

a. the increase in quantity sold is large enough to offset the lower price

calculate the income elasticity if an 8 percent increase in income leads to a 4 percent increase in quantity demanded for organic produce a. -.66 b. .5 c. 1.5 d. 2

b. .5

price is, $16,14,12,10,8,6,4,2 and quantity is 3,4,5,6,7,8,9,10. over what ranges of prices is the demand inelastic? a. over the entire range of prices b. between $2 and $8 c. between $12 and $16 d. between $8 and $16

b. between $2 and $8

which of the following goods would have the most inelastic demand? a. luxury cars b. bread c. ski vacations d. big screen TVs

b. bread

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 perfectly inelastic b. demand is likely to be relatively inelastic c. demand is likely to be perfectly elastic d. demand is likely to be relatively elastic

b. demand is likely to be relatively inelastic

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

b. inelastic because there are no good substitutes for gasoline

the price elasticity of demand for stork ice cream is -4. Suppose you're told that following price increases, 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. .4 percent

c. 2.5 percent

suppose a hurricane decreased the supply of oranges so that price of oranges rose form $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. .11 b. .37 c. 2.69 d. 9.33

c. 2.69

price elasticity of demand measures a. how responsive sales are to changes in the price of a related good b. how responsive suppliers are to price changes c. how responsive quantity demanded is to a change in price d. how responsive sales are to change in buyers' incomes

c. how responsive quantity demanded is to a change in price

economists estimated that the price elasticity of beer is -.30 and the income elasticity of beer is .09. This means that a. an increase in the price of beer will leas to an increase in revenue for beer sellers and beer is a normal good b. an increase in the price of beer will increase the quantity demanded of beer 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 for beer and beer is a necessity

d. an increase in the price of beer will lead to a decrease in the quantity demanded for beer and beer is a necessity

if demand is inelastic, the absolute value of the price elasticity of demand is a. greater than the absolute value of the slope of the demand curve b. one c. greater than one d. less than one

d. less than one

the price elasticity of an upward- sloping supply curve is always a. negative b. impossible to determine c. greater than one d. postive

d. postive

consider a demand curve that has no constant elasticity value of 0. what happens to quantity demanded and total revenue when price increases a. the quantity demanded does not change but total revenue decreases b. the quantity demand and total revenue fall to zero c. the quantity demanded and total revenue remain the same d. the quantity demanded does not change but the total revenue increases

d. the quantity demanded does not change but the total revenue increases