Econ Chapter 6

The price elasticity of demand can be found by:

comparing the percentage change in quantity demanded to the percentage change in price.

The price of pretzels increases and the demand for tortilla chips decreases, so we can assume that these two goods are:

complementary

Suppose that an increase in the price of a good leads to an increase in total revenue. Ignoring other factors (like supply), at its current price the good must be:

price-inelastic

The Demand Curve for Oil. The price elasticity of demand between $20 and $21 is _____ since the price elasticity is _____.

price-inelastic; less than 1.

Label the scenarios as examples of elastic, inelastic, or unit elastic demand. (A)When Ruko, a device used to stream movies at home, increases prices by 48 %, total revenue decreases by 55 %. (B)When Cinema Supreme decreases ticket prices by 19 %, total revenue does not change. (C)When Bluebox, a DVD rental kiosk, increases its prices by 57 %, total revenue increases by 28 %.

(A) elastic (B) unit elastic (C) inelastic

Label demand as elastic, unit elastic, or inelastic for each scenario. Use the midpoint method when applicable to calculate the price elasticity of demand. (A)Label demand as elastic, unit elastic, or inelastic for each scenario. Use the midpoint method when applicable to calculate the price elasticity of demand. (B)Contain Yourself!, a plastic container company, raises the price of its signature Lunchbox container from $3.00 to $4.00 . As a result, the quantity sold drops from 20,000 to 15,000. Economists working for the United States have determined that the elasticity of demand for gasoline is 0.5 . (C)Capital Metro decides to increase bus fare rates from $2.00 to $2.21 . Consequently, the number of passengers who decide to take the bus in Austin drops from an average of 70,000 riders a day to an average of 61,000 riders a day.

(A) unit-elastic (B) inelastic (C) elastic

Gas prices recently increased by 25%. In response, purchases of gasoline decreased by 5%. According to this finding, the price elasticity of demand for gas is:

0.2

Suppose the price of university sweatshirts increases from $10 to $20 and the quantity supplied increases from 20 to 30. The price elasticity of supply, using the midpoint formula, is:

0.60

If the price of a good increases by 20% and the quantity demanded changes by 15%, then the price elasticity of demand is equal to:

0.75

What is the price elasticity of demand (using the midpoint formula) between $1.25 and $1.00?

0.82

Andrina always spends 20 % of her income on gadgets. Assume that her income increases by some percentage while the price of gadgets remains constant (and that all gadgets cost the same). What is her income elasticity of demand for gadgets?

1

The graph depicts 5 demand curves. Please rank each curb in terms of elasticity. A curve that is more elastic than another curve for any given quantity can be considered more elastic.

C, E, B ,D A

Last week, Michelle spent $30 on caviar. Today, Michelle still spends $30 on caviar even though its price has doubled. What is Michelle\'s price elasticity of demand for caviar? (Use the midpoint formula for your calculation.)

1

The price of notebooks is $5, and at that price consumers demand 12 notebooks. If the price rises to $7, consumers will decrease quantity demanded to 4 notebooks. Using the midpoint formula, what is the price elasticity of demand for notebooks?

3

In anticipation of a major hurricane hitting the Gulf Coast, the quantity gasoline of sales rise from 360 million gallons to 375 million gallons. Based on this information, what is the percent change in gasoline sales? Please specify your answer to one decimal place and use the midpoint formula.

4.1%

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination. Therefore, all other things equal, you would expect the demand for:

Bayer aspirin to be more price-elastic than is the demand for medical examinations.

A men's tie store sold an average of 30 ties per day at $5 per tie but sold 50 of the same ties per day at $3 per tie. The price elasticity of demand, by the midpoint method, is:

Equal to 1

The price elasticity of demand for fresh tomatoes has been estimated to be 2.22. If a new insecticide and fertilizer treatment yields a 20% increase in the nation's fresh tomato crop, how will that affect total revenue from fresh tomatoes, all other things unchanged?

Total revenue will rise

The price elasticity of demand along a demand curve with a constant slope:

decreases in absolute value as quantity demanded rises

A major state university in the South recently raised tuition by 12%. An economics professor at this university asked his students, "How many of you will transfer to another university because of the increase in tuition?" One student in about 300 said that he or she would transfer. Based on this information, the price elasticity of demand for education at this university is:

highly inelastic

The income elasticity of demand for eggs has been estimated to be 0.57. If income grows by 5% in a period, all other things unchanged, demand will:

increase by about 2.9%

If a change in price causes total revenue to change in the same direction, we can conclude that the demand is:

price inelastic

If the price of chocolate-covered peanuts increases and the demand for strawberry licorice twists increases, this indicates that these two goods are _____ goods.

substitue