Econ E

John's demand schedule for pizza is indicated below. If the current price of pizza is $1.10 per slice, what is John's consumer surplus if he buys five slices of pizza?

$1.00

Suppose that Sbucks reduces the price of its premium coffee from $2.20 to $1.80 per cup, and as a result, the quantity sold per day increased from 350 to 450. Over this price range, the absolute value of the price elasticity of demand or Sbucks coffee is

$1.25

If admission to a Shania Twain concert in a football stadium is lowered from $60 to $40, and attendance increased from 25,000, the price elasticity for attending the concert is approx

-0.83

If the quantity demanded of a product fell from 11,000 to 10,000 when price rose from $9 to $10, the price elasticity of demand over this range is equal to approx

-0.9

Sally recently got a 15% raise. She now purchase 7.5 percent more steak dinners. Sally's income elasticity for steak dinners is

0.5

Julia knows the price elasticity of movie rentals is 3. She knows, therefore, that if she raises her price from $2 to $2.50, her rentals will drop by approximately

66 percent.

Why do economists use the concept of elasticity in addition to measurement of the slope of the demand curve?

Elasticities are independent of the units of measure.

An increase in the price of computer diskettes leads to an increase in total expenditures on the diskettes. Which of the following is true for this price change?

The demand for computer diskettes is inelastic.

For a price increase from $10 to $11, the price elasticity of the demand curve depicted in Figure 7-8 is

approx equal to -2

At a price of $10, the price elasticity of the demand curve depicted in Figure 7-9 is

approximately equal to -1.

In the price range between $3 and $4, the price elasticity of the demand curve depicted in Figure 7-7 is

approximately equal to -3.

Refer to Figure 7-15. Along which of these segments of the supply curve is supply least elastic?

between E & F

Consider a consumer who purchases two goods, X and Y. If the price of good Y falls, then the substitution effect by itself will

cause the consumer to buy more of good Y and less of good X

Of the following goods, which is most likely to have the lowest elasticity of demand?

coffee

The price elasticity of demand for automobiles measures the responsiveness of

consumer purchases of automobiles to a change in their income.

Ceteris paribus, an increase in the price of a good will cause the

consumer surplus derived from the good to decrease.

A good classified as inferior if

consumers buy less when income rises

Terri currently consumes 10 hamburgers and 2 shirts per month. At her current rates of consumption, her marginal utility of hamburgers is 10 and her marginal utility of shirts is 50. If the price of hamburgers is $2 each, while the price of a shirt is $25, Terri

could improve her total utility by buying fewer shirts and more hamburgers.

Refer to Figure 7-12. An increase in price from $30 to $35 would

decrease total revenue by $250

Tele-Com, Inc., the nation's largest cable TV company, tested the effect of a price reduction for the Disney Channel. It lowered prices from $10.75 to $7.95 and found that the number of customers more than doubled. This means the

demand for the Disney Channel is elastic in this price range.

Cary increases the price of her cakes from $8 to $10 per cakes, but her cash receipts decrease by 2%. The price elasticity of demand (in the $8 to $10 range)

elastic

Rebel Records announces it is cutting the prices of its bluegrass album titles by 25 percent. If Rebel is seeking to increase revenues it must believe that the elasticity of demand for bluegrass album is

elastic

If you cut your prices by 10% and total revenues rise, the price elasticity of demand is

greater than 1 in absolute value

For this demand curve, the price elasticity of demand is

more elastic at $3 than at $2

If bus travel is an inferior good, then its income elasticity of demand will be

negative.

If Francis experiences a decrease in his income, we would expect that Francis's demand for

normal goods will decrease.

If Krispy Kreme doughnut shop near the campus increases its prices by 5%, but revenues from its sales are unchanged, the price elasticity of demand for the service offered by the doughnut shop must be

of unitary elasticity

Other things constant, the price elasticity of demand for a product will tend to be smaller (more inelastic) if

people spend a large share of their income on the product

A completely vertical demand curve implies a price elasticity of demand that is

perfectly inelastic.

When demand is price elastic

price and total revenue move in the same direction

A 20 percent increase in the price of sugar reduces sugar consumption by about 10 percent. Such a price increase causes households to

spend more on sugar

When economists say the price elasticity of supply is elastic, they mean that

suppliers are willing to produce much larger amounts of their good

What separates consumption bundles that are attainable from those that are unattainable

the consumption opportunity constraint

Which of the demand curves in Figure 7-16 is unit elastic?

the curve in graph c

When a good is more broadly defined,

the fewer substitutes it has so the less elastic is its demand.

When demand is price inelastic

total revenue increases whether price goes up or down

The price elasticity of supply

will always be positive.

You and your college roommate eat 3 packages of ramen noodles each week. After grad last month, both of you were hired at several times your college income. You still enjoy ramen very much and buy even more, but your roommate plans to buy fewer ramen noodles in favor of foods she prefers more. When looking at income of demand for ramen

yours would be positive and your roommate's would be negative.