LaunchPad Chapter 5: Elasticity

A grocery store announced a 50% decrease in the price of local honey. Sales increased by 200%. Based on the information, the price elasticity of honey is:

4

If the price elasticity of demand is 10, then for every 1% increase in price, there is a:

10% decrease in quantity demanded

Suppose that the quantity demanded for a product falls by 9% as people's incomes fall by 3%. What is the income elasticity for this good?

3.00

A firm increases its price for a good and total revenues increase. From this, we can conclude that its demand:

is price inelastic

If hot dogs and relish are complements, their cross elasticity of demand is:

less than 0

Which of these is NOT a determinant of elasticity?

sales tax rate placed on an item

Which of the following is a possible measurement of inelastic demand?

0.7

If the price of a product falls by 15% and the quantity supplied falls by 25%, the elasticity of supply is:

1.67

Walmart is thinking about offering a 25% discount on a brand of shoes. If the elasticity of demand is two, then the discount would increase sales by:

50%

Which of these would result in a higher price elasticity?

a longer period of time

If a product's price rises by 6% and its quantity demanded falls by 8%, then we can say that demand for this product is:

elastic

Products with many close substitutes tend to have _____ demand, and products considered to be luxury goods tend to have _____ demand.

elastic; elastic

The greater the percentage of the budget spent on a good, the:

higher the elasticity of demand is

If the cross elasticity of demand between fly rods and reels is -0.8, a decrease in the price of rods would _____ sales of reels because the two goods are _____.

increase; complements

Assume a good is considered elastic. If the price of the good decreases, then total revenue:

increases

Suppose your income falls from $35,000 to $33,000 and that your quantity demanded of a good increases from 40 units to 55 units. The good is said to be a(n):

inferior good

In general, the flatter the supply curve is, the:

more elastic is supply

If soda and potato chips are complements, then their cross elasticity of demand is:

negative

A vertical demand curve represents demand that is:

perfectly inelastic

Knowing a product's price elasticity of demand allows economists to:

predict the amount by which quantity demanded will change in response to a change in price