Econ Ch4

If the quantity of spaghetti demanded decreases by 4 percent in response to an 12 percent increase in the price of pasta sauce, then the cross-price elasticity of demand for spaghetti with respect to the price of pasta sauce is:

-0.33

If a 6 percent decrease income leads to a 9 percent increase in the quantity of lottery tickets demanded, then the income elasticity of demand for lottery tickets is:

-1.5

If a 5 percent increase income leads to a 2.5 percent decrease in the quantity of oatmeal demanded, then the absolute value of the income elasticity of demand for oatmeal is

0.5

The price elasticity of demand for water will be _____ in the long run than in the short run.

higher

The percentage change in quantity demanded that results from a 1 percent change in price is the

price elasticity of demand.

If the income elasticity of demand for guitars is 0.2, then a 10 percent increase income will lead to a _____ in the quantity of guitars demanded.

2 percent increase

If the income elasticity of demand for airplane tickets is positive, then airplane tickets are

a normal good.

If the owners of a local clothing boutique increase the price of their merchandise, then their total revenue

could fall since fewer people may be willing to shop there.

If the price elasticity of demand is greater than 1 and price decreases, then total expenditure will

increase

If the price elasticity of demand for shoes is 0.70, then the demand for shoes is _____.

inelastic

A consumer's weekly demand for gasoline is likely to be _____ price elastic than his or her yearly demand for gasoline.

less

The price elasticity of demand is

the percentage change in quantity demanded that results from a 1 percent change in price.

The elasticity of supply is:

the percentage change in quantity supplied in response to a 1 percent change in price.

The price elasticity of supply will tend to be higher when _____.

the time horizon is longer it's easy to find or produce substitute inputs

Price × quantity equals ________.

total revenue total expenditure

If the price elasticity of demand for wine is 1.00, then the demand for wine is _____.

unit elastic

If the income elasticity of demand for hamburgers is -0.6, then a 1 percent increase income will lead to a _____ in the quantity of hamburgers demanded.

0.6 percent decrease

If the quantity of peanuts demanded increases by 6 percent in response to a 3 percent increase in the price of almonds, then the cross-price elasticity of demand for peanuts with respect to the price of almonds is:

2

If the quantity supplied decreases by 6 percent in response to a 2 percent drop in prices, then the price elasticity of supply is:

3

If the owners of a nearby restaurant decrease the price of their food, then their total revenue

could increase since more people may be willing to eat there.

Suppose the demand for first-class airline tickets is inelastic with respect to price. If the price of first-class airline tickets decreases, then total expenditure will _____.

decrease

If the cross-price elasticity of demand for bike helmets with respect to the price of bikes is -0.25, then if the price of bikes increases by 10 percent, the quantity of bike helmets demanded will

decrease by 2.5 percent.

If the price elasticity of demand is greater than 1 and price increases, then total expenditure will

decrease.

If the price of sofas goes up by 10 percent and the quantity of sofas demanded falls by 15 percent, then the total expenditure on sofas will

decrease.

If the price elasticity of demand for beer is 1.19, and the price of beer goes up by 1 percent, then the quantity of beer demanded will _____.

go down by 1.19 percent

If the price elasticity of demand for coffee is 0.25, and the price of coffee goes down by 1 percent, then the quantity of coffee demanded will

go up by 0.25 percent.

If the price elasticity of supply for gasoline is 1.6, then if the price of gas goes up by 1 percent, the quantity of gasoline supplied will

go up by 1.6 percent.

If the demand for economy-class airline tickets is elastic with respect to price, then if the price of economy-class airline tickets decreases, then total expenditure will _____.

increase

If the price of lawnmowers goes up by 9 percent and the quantity of lawnmowers demanded falls by 5 percent, then the total expenditure on lawnmowers will

increase

If the cross-price elasticity of demand for motorcycles with respect to the price of cars is 0.05, then if the price of cars increases by 10 percent, the, the quantity of motorcycles demanded will

increase by 0.5 percent.

When the price elasticity of demand is greater than 1, changes in price and changes in total expenditure

move in opposite directions.

If ground beef is an inferior good, then the income elasticity of demand for ground beef will be

negative

If quantity demanded goes down by 3 percent when price rises by 6 percent, then the price elasticity of demand is:

0.5

The percentage change in quantity supplied that results from a 1 percent change in price is the

elasticity of supply.

If the quantity of Big Macs demanded decreases by 4 percent in response to an 8 percent decrease in the price of Whoppers, then the cross-price elasticity of demand for Big Macs with respect to the price of Whoppers is:

0.5

If the quantity supplied decreases by 2 percent in response to a 4 percent drop in prices, then the price elasticity of supply is:

0.5

If quantity demanded goes up by 10 percent when price falls by 2 percent, then the price elasticity of demand is:

5 Reason: The price elasticity of demand is the percentage change in the quantity demanded divided by the percentage change in price (=10÷2).

If the demand for economy-class airline tickets is elastic with respect to price, then if the price of economy-class airline tickets increases, then total expenditure will _____.

decrease

Given that there are many different kinds of cereal that people can buy, the price elasticity of demand for any particular brand of cereal is likely to be relatively _____.

high

If Sal's Pizzeria uses tomato sauce, dough and cheese to make both pizza and calzones, then the price elasticity of supply for pizza at Sal's is likely to be relatively _____.

high

The elasticity of demand for a given brand of ice cream is likely to be _____ than the elasticity of demand for ice cream in general.

higher

The elasticity of demand for a good that has very few substitutes is usually relatively _____.

low

Total expenditure equals:

P×Q. total revenue.

The percentage change in quantity supplied that results from a 1 percent change in price is the

elasticity of supply