Econ

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?

2.5 percent -10/-2.5=-4

Suppose the value of the price elasticity of demand is -3. What does this mean?

A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent

Which of the following goods would have the most elastic demand?

Apple iPhone XR

Which of the following statements about scarcity is true?

Scarcity refers to the situation in which unlimited wants exceed limited resources

Perfectly inelastic demand is represented by a demand curve which is _____, and relatively inelastic demand in represented by a demand curve which is ______

Vertical; downward sloping

Consider the following statements:

a)car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas station in the area b)banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment c)firms produce more of a particular DVD when its selling prices rises

If a 7 percent increase in income leads to a 10percent decrease in quantity demanded for a product, this product is

an inferior good

Economists assume that individuals

are rational and respond to incentives

If 20 units are sold at a price if $20 and 40 units are sold at a price of $10, then the absolute value of the price elasticity of demand?

greater than one

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.

greater; a normal

Price elasticity of demand measures

how responsive quantity demanded is to a change in price

If demand is inelastic, the absolute value of the price elasticity of demand is

less than one

In economics, the term ________refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade

market

Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more risky, and therefore carry a higher cost than not retiring. By using all available information as they act to achieve their goals, these teachers are exemplifying the economic idea that

people are rational

When the price of Starbucks coffee increased by 8 percent, the quantity demanded of Peet's coffee increased by 10 percent. Then the cross-price elasticity of demand between Starbucks coffee and Peet's coffee is

positive, so the two goods are substitutes

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits.

rationally

If the absolute value of price elasticity of demand for eggs in 0.2?What happens to sales revenue if the price of canned soup rises?

sales revenue rises

In economics, choices must be because we live in a world of

scarcity

By definition, economics is the study of

the choices people make to attain their goals, given their scarce resources

The price elasticity of supply measures

the responsiveness of quantity supplied to changes in prices.

If the quantity of toothpicks supplied increases by 25 percent when price increase by 12 percent, then

the supply of toothpicks is elastic

If the cross price elasticity of demand between good A and good B is a negative number, then it indicates that

the two goods are complements

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded

will decrease by 45 percent

If demand is perfectly inelastic, the absolute value of the price elasticity of demand is

zero