Econ Exam Assignment #4

which of the following could explain why the demand for table salt is inelastic?

households devote a very small portion of their incomes to salt purchases

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product.

0.5; the product is inelastic

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? Use the midpoint formula.

1.62

refer to figure 6-3. using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f.

3.125

Refer to Figure 6-6. As price falls from PA to PB, the quantity demanded increased the most along D1; therefore

D1 is more elastic than D2 or D3

refer to figure 6-6. as price falls from PA to PB, the quantity demanded increases the most along D1; therefore,

D1 is more elastic than D2 or D3.

rank these three items in terms of the elasticity of the demand for them at any given price, from most elastic to least elastic: hot beverages, coffee, and Peet's Coffee.

Peet's coffee, coffee, hot beverages

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

considering the following pairs of 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 paris listed will have a negative cross-price elasticity?

a and b only

if a 5 percent increase in income leads to a 10 percent increase in quantity demanded for airline travel, then airline travel is

a luxury

economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09. This means that

an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is a normal good.

income elasticity measures how a good's quantity demanded responds to

change in buyers' incomes

a liner-downward sloping demand curve has price elasticites (in absolute values) that

decrease as price decreases

based on the data in the table, between a price of 10.99 and 12.99, the demand for streaming service is

elastic

if at a price of $24, Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids, the demand for her orchids is

elastic

price elasticity of demand measures

how responsive quantity demanded is to a change in price

Opera Estate Girls' School is considering increasing its tuition to raise revenue. if the school believes that raising tuition will increase revenue it is assuming that the demand for attending the school is

inelastic

which of the following statements about the price elasticity of demand along a downward-sloping linear demand curve is true?

it is elastic at the highest prices and inelastic at the lowest prices

Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers?

it is perfectly elastic

the price elasticity of demand for bread is estimated at -0.40. what happens to sale revenue if the price of bread rises?

it rises

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

less than one

the larger the share of a good in a consumers budget, holding everything else constant, the

more price elastic is a consumers demand

refer to figure 6-4 the absolute value of the price elasticity of demand at the midpoint of the demand curve is

one

refer to figure 6-1. a perfectly elastic demand curve is shown in

panel B

refer to figure 6-1. the demand curve on which elasticity changes at every point is given in

panel C

the price elasticity of an upward-sloping supply curve is always

positive

If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would

remain constant

if the cross-elasticity of demand for two goods is positive, this implies that the two goods are

substitutes

refer to figure 6-4. which of the following statements about price elasticity of demand is true?

the elastic portion of a straight-line, downward-sloping demand curve corresponds to the segment above the midpoint

suppose the demand curve for a product is represented by a typical downward-sloping curve. now suppose the demand for this product increases. which of the following statements predicts the resulting increase in price?

the more elastic the supply curve, the smaller the price increase

Which of the following statements is true?

the more narrowly we define a market, the more elastic the demand for a product will be

holding everything else constant, the demand for a good tends to be more elastic

the more substitutes there are for the good

consider a demand curve that has a constant elasticity value of 0. what happens to quantity demanded and total revenue when price increases?

the quantity demanded does not change but total revenue increases.

assume that the demand curve for sunblock is linear and downward-sloping. which of the following statemenst about the slope of demand curve for sunblock and the price elasticity of demand for sunblock are true?

the slope is constant, but the price elasticity of demand is not constant at all points along the demand curve for sunblock

which of the following is not a determinant of a good's price elasticity of demand?

the slope of the demand curve

which of the following statements about price elasticity of demand is false?

the value of the price elasticity of demand is the reciprocal of the value of the demands curves slope

the midpoint formula is used to measure the elasticity of demand between two point son a demand curve

to ensure that we have only one value of the price elasticity of demand between two points on a demand curve

perfectly inelastic demand is represented by a demand curve which is ____, and relatively inelastic demand is represented by a demand curve which is _____.

vertical; downward sloping

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

suppose the diagram shows the supply curves for a product in the short and long run. Which supply curve represents supply in the short run and which curve represents supply in the long run?

SA represents supply in the short run and SB represents in the long run