Chapter 5 Economics

Suppose the price of a Lyft ride in Austin, TX decreases from &15 to $12 causing the quantity of rides demanded to increase from 1000 to 1600. Using the midpoint method, the price elasticity of demand for a Lyft ride is

2.08

Sylvia's favorite burrito shop raised its prices from $6 to $9. The percentage change in the price is

50%.

The _____ is negative for complementary goods and positive for substitute goods.

cross-price elasticity of demand

Suppose the price of apples increase by 20%, resulting in consumers to purchase 15% more pears. Given this information, it appears that

cross-price elasticity of pears is .75

Elasticities are often _____ in the long run than in the short run.

higher

A perfectly elastic supply curve is

horizontal.

An increase in demand will shift the demand curve to the right, therefore _____ the equilibrium price.

increasing

An addicted smoker likely has which type of demand?

inelastic

If a large change in price results in a small change in demand, then demand is

inelastic

Higher costs can typically be passed onto consumers when a product is considered

inelastic.

A person who takes aspirin most likely has a _____demand for that drug. Therefore an increase in the price of aspirin will result in _____ total revenue for the drug company.

inelastic; increased

When income increases and demand for a good falls, the good is considered an

inferior good.

If you divide the change in quantity by the original quantity, you are calculating the

percentage change.

A tax in imposed on chewing gum. Consumers pay all of the tax while the producers pay none of the tax. If you were to draw a graph you would see that the demand curve is

perfectly inelastic.

Elasticity supply occurs if the change in quantity supplies is

relatively responsive.

The price elasticity of demand measures the

responsiveness of quantity demanded to a change in price.

Which of the following factors does NOT influence the price elasticity of demand of a product?

the slope of the supply curve

Which of the following goods represents a cross-price elasticity likely greater than zero?

the substitute goods of blueberries and strawberries.

A product is considered relatively elastic

when there are many substitutes.