ECON Chapter 4 Homework

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Cut

Demand is elastic if a price _______ increases total revenue.

Rise

Demand is inelastic if a price _____ increases total revenue.

Cut or rise

Demand is unit elastic if a price leaves total revenue unchanged.

​elastic; elastic; elastic

The closer the substitutes for a good or​ service, the more​ ______ is demand. The greater the proportion of income spent on a​ good, the more​ ______ is demand. The longer the time that has elapsed since a price​ change, the more ____ is demand

Price of a substitute or complement

The cross elasticity of demand is a measure of the responsiveness of the demand for a good to a change in the​ ______, other things remaining the same.

The price elasticity of demand for orange juice is 1.5. The cross elasticity of demand for apple juice with respect to the price of orange juice is 2.5.

A 8 percent rise in the price of orange juice decreases the quantity of orange juice demanded by 12 percent and increases the quantity of apple juice demanded by 20 percent. Calculate the price elasticity of demand for orange juice and the cross elasticity of demand for apple juice with respect to the price of orange juice.

Elastic

Dan sells newspapers. Dan says that a 8 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 10 percent. According to​ Dan, the demand for newspapers is​ _______.

Elasticity is 0.60

If the quantity demanded of pizza increases by 33 percent when the price of pizza falls by 55 ​percent, what is the price elasticity of demand for pizza​?

Inelastic

If the quantity of dental services demanded increases by 55 percent when the price of dental services falls by 10​ percent, the demand for dental services is​ _______.

Perfectly inelastic

Marvin loves candy bars. As the price of a candy bar increases from​ $1.00 to​ $1.25 to​ $1.50, Marvin continues to buy a dozen candy bars every week. ​Marvin's demand for candy bars is​ _______.

Percentage change in quantity​ demanded; percentage change in price

Price elasticity of demand is equal to the​ ______ divided by the​ ______.

​Elastic; greater

Question Info: As gas and food prices increased and home prices​ slumped, people had less extra income to spend on home improvements. And the improvements that they made were on small inexpensive types of repairs and not major​ big-ticket items. A. This news clip implies that​ big-ticket home-improvement items are income​ ______ and the income elasticity of demand for these items is​ ______ than 1.

Elasticity is 1.25, and demand is elastic.

Rain spoils the strawberry crop. As a​ result, the price of strawberries rises from ​$4 to ​$6 a box and the quantity demanded decreases from 1,000 to 600 boxes a week. Over this price​ range, what is the price elasticity of​ demand? Describe the demand for strawberries.

Positive

Rice and noodles are substitutes. The cross elasticity of demand for rice with respect to the price of noodles is​ _______.

Negative

Ski trips and ski jackets are complements. The cross elasticity of demand for ski trips with respect to the price of a ski jacket is​ _______.

Decreases as the price of a bus ride falls

The demand curve for bus rides is a​ downward-sloping straight line. The price elasticity of demand for bus rides​ _______.

Unit​ elastic; a price cut leaves total revenue unchanged. Total revenue never reaches a maximum

The demand for hotel rooms is​ _____ because​ _____.

A 5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded

The demand for plums is unit elastic if​ _____.

The quantity demanded of a good to a change in its price when all other influences on buying plans remain the same

The price elasticity of demand is a​ units-free measure of the responsiveness of​ ______.

Percentage change in the quantity​ demanded; percentage change in the price

The price elasticity of demand is calculated by dividing the​ _______ by the​ _______ .

0.20

The table gives some data on the supply of maple syrup in a small town. When the price rises from ​$9 a cancan to ​$11 a can​, the elasticity of supply is​ _______.

Remains the​ same; remains the same

The table gives the demand schedule for hotel rooms. If the price falls from​ $400 to​ $250 a​ night, total revenue​ _____. If the price falls from​ $250 to​ $200 a​ night, total revenue​ _____.

Elasticity is 0.23

The table shows the demand schedule for DVD rentals. When the price of a DVD rental DVD rental rises from $1.00 to $2.00​, what is the price elasticity of demand for DVD rentals​?

Rises; inelastic

The table shows the demand schedule for computer chips. As the price rises from​ $200 a chip to​ $300 a​ chip, total revenue​ ______. So at a price of​ $250 a​ chip, demand is​ ______.

increases by 250 million, decreases by 1250 million, and max revenue at $350 per

The table shows the demand schedule for computer chips. What happens to total revenue if the price falls from ​$400 to ​$350 a​ chip? What happens to total revenue if the price falls from ​$250 to ​$200 a​ chip? At what price is total revenue at a​ maximum?

Change in total​ revenue; a change in the price

The total revenue test is a method of estimating the price elasticity of demand by observing the​ ______ that results from​ ______, when all other influences on the quantity sold remain the same.

True

Total revenue from the sale of a good equals the price of the good multiplied by the quantity sold.

Is almost infinity

Webster Dictionaries and Oxford Dictionaries are almost perfect substitutes. The price elasticity of demand for Webster Dictionaries​ _______.

The income elasticity of demand of cell phones is 2.

When income increases by 4 percent and all prices remain the​ same, the quantity of cell phones demanded increases by 8 percent. Calculate the income elasticity of demand of cell phones.

Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price.

Which of the following statements describes a perfectly inelastic demand​?


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