ch 6 micro
If a 15 percent increase in the price of Cheerios causes a 11 percent reduction in the number of boxes of cereal demanded, the price elasticity of demand for Cheerios is −___________ (Enter your response rounded to two decimal places.) Part 2 The demand for Cheerios is ___________
0.73 inelastic
According to an article in the Wall Street Journal in September 2018, "Apple's iPhone unit sales for the nine-month period ended in June were largely flat with the same period the year before at a bit less than 170 million devices, yet iPhone revenue jumped 15% in that time, to $129.5 billion." Source: Dan Gallagher, "Apple's New iPhones Will Need to Collect," Wall Street Journal, September 10, 2018. a. How is it possible for Apple to have increased the revenue i
A
Consider the markets for BP supreme-grade gasoline, all BP grades of gasoline, and all gasoline. For which of these three markets will demand be most elastic? Demand will be most elastic for A. BP supreme-grade gasoline, then for all BP grades of gasoline, and then for all gasoline. B. all gasoline, then for BP supreme-grade gasoline, and then for all BP grades of gasoline. C. BP supreme-grade gasoline, then for all gasoline, and then for all BP grades of gasoline. D.
A
Income elasticity of demand is Part 2 A. the percentage change in quantity demanded divided by the percentage change in income. B. the percentage change in income divided by the percentage change in prices. C. the percentage change in quantity supplied divided by the percentage change in price. D. the percentage change in quantity demanded of one good divided by the percentage change in the price of another good. E. the percentage change in quantity demanded divided by the percentage change in p
A
Is it possible to tell from the income elasticity of demand whether a product is a luxury good or a necessity? Part 7 A. Yes. If the income elasticity of demand is greater than 1, then the good is a luxury. If the income elasticity of demand is positive but less than 1, then the good is a necessity. B. Yes. If the income elasticity of demand is greater than 3, then the good is a luxury. If the income elasticity of demand is positive but less than 3, then the good is a necessity. C
A
The price elasticity of supply always has A. a nonnegative value. B. a zero value. C. a negative value. D. None of the above.
A
Which of the following is a primary determinant of the price elasticity of supply Part 2 The price elasticity of supply is affected by Part 3 A. the passage of time. B. the share of the good in consumer budgets. C. whether the good produced is a luxury or a necessity. D. the definition of the market. E. whether the good produced has close substitutes available.
A
On the lower part of a linear demand curve below the midpoint, the demand is ________ and raising the price causes total revenue to _________. A. elastic; decrease B. inelastic; increase C. inelastic; decrease D. elastic; increase
B
Suppose a study shows that the demand for Lacoste shirts is more elastic than the demand for all shirts. What could be a likely explanation for this? The demand for Lacoste shirts could be more elastic than the demand for all shirts because A. Lacoste shirts are consumed over a shorter period of time. B. Lacoste shirts have more close substitutes. C. Lacoste shirts are more broadly defined. D. Lacoste shirts are more of a necessity. E. Lacoste shirts are less costly.
B
When demand increases, equilibrium price will rise ____________ when supply is _________ elastic. A. more; more B. more; less C. less; less D. None of the above. Supply elasticity does not matter when determining the effect of a shift in demand on the equilibrium price.
B
If a 20 percent increase in the price of Red Bull energy drinks results in a decrease in the quantity demanded of 25 percent, demand for Red Bull is _______ in this range. A. unit elastic B. vertical C. elastic D. inelastic
C
If a supply curve is a vertical line, it is ________, and if it is a horizontal line, it is ________. A. perfectly inelastic and has an elasticity value of infinity; perfectly elastic and has an elasticity value of zero B. perfectly elastic and has an elasticity value of zero; perfectly inelastic and has an elasticity value of infinity C. perfectly inelastic and has an elasticity value of zero; perfectly elastic and has an elasticity value of infinity D. perfectly elastic an
C
Suppose gasoline has few close substitutes available. If so, then an increase in the price of gasoline will likely Part 3 A. increase the quantity of gasoline demanded by a relatively small amount. B. not change the quantity of gasoline demanded. C. decrease the quantity of gasoline demanded by a relatively small amount. D. increase the quantity of gasoline demanded by a relatively large amount. E. decrease the quantity of gasoline demanded by a relatively large amount.
C
Use income elasticity to distinguish a normal good from an inferior good. Part 4 For a normal good, the income elasticity of demand will be Part 5 A. negative, but for an inferior good, the income elasticity of demand will be positive. B. positive or negative, but for an inferior good, the income elasticity will be zero. C. positive, but for an inferior good, the income elasticity of demand will be negative. D. zero, but for an inferior good, the income elasticity will
C
If the cross-price elasticity of demand is negative, then the products are: A. related, but if it is positive, then the products are unrelated. B. inferior goods, but if it is positive, then the products are normal goods. C. necessities, but if it is positive, then the products are luxuries. D. complements, but if it is positive, then the products are substitutes. E. substitutes, but if it is positive, then the products are complements.
D
Suppose Wendy's hamburgers have many close substitutes available. If so, then an increase in the price of Wendy's hamburgers will likely A. decrease the quantity of Wendy's hamburgers demanded by a relatively small amount. B. increase the quantity of Wendy's hamburgers demanded by a relatively large amount. C. increase the quantity of Wendy's hamburgers demanded by a relatively small amount. D. decrease the quantity of Wendy's hamburgers demanded by a relatively large amount. E. not change th
D
What are the key determinants of the price elasticity of demand for a product? Part 2 The key determinants of the price elasticity of demand for a product are: Part 3 A. competition from existing firms, threat from potential entrants, competition from substitutes, bargaining power of buyers, and bargaining power of sellers. B. government regulations, control of a key resource necessary for production, network externalities, and economies of scale. C. whether a firm has
D
What happens when the quantity demanded is very responsive to changes in price? The percentage change in quantity demanded will be A. equal to the percentage change in price. B. less than the percentage change in price. C. unrelated to the percentage change in price. D. greater than the percentage change in price.
D
Compare the demand for sugar with demand for clothes. The demand for sugar is likely Part 3 A. more elastic because sugar tends to be purchased in larger quantities. B. more inelastic because sugar tends to be purchased more frequently. C. more elastic because sugar tends to represent a smaller fraction of a consumer's budget. D. more elastic because sugar tends to represent a larger fraction of a consumer's budget. E. more inelastic because sugar tends to represent a smaller fraction of a
E
Suppose the demand for a product increases. What will be the effect on the market equilibrium price and quantity if supply is perfectly inelastic? Part 2 If supply is perfectly inelastic, then Part 3 A. the equilibrium price will increase and the equilibrium quantity will increase. B. the equilibrium price will not change and the equilibrium quantity will not change. C. the equilibrium price will decrease and the equilibrium quantity will decrease. D. the equilibrium price will decrease an
E
The cross-price elasticity of demand is A. the percentage change in quantity demanded of one good divided by the percentage change in the quantity of another good. B. the percentage change in quantity demanded divided by the percentage change in income. C. the percentage change in quantity supplied divided by the percentage change in price. D. the percentage change in quantity demanded divided by the percentage change in price. E. the percentage change in quantity demanded of one good divided
E
Which determinant is the most important?
availability of close substitutes
An accountant increases the price he charges for his services by 2 percent. In response, the demand for his services decreases by 4 percent. Will the accountant's revenue from his accounting services increase, decrease, or remain unchanged? Part 2 The accountant's revenue will ___________
decrease
c. Would policymakers in Chicago have been more successful in meeting their goal of discouraging people from drinking sweetened soda if the demand for soda were more elastic or more inelastic? Would they have been more successful in meeting their goal for raising more revenue for the city if the demand for soda were more elastic or more inelastic? The city would have been more successful in discouraging soda consumption with a 1-cent-per-ounce tax on soda if the demand for soda were mor
elastic, inelastic
The drug insulin is one example of a product that would have a perfectly elastic demand curve. true or false .
false
If the demand for orange juice is elastic, will a decrease in the price of orange juice increase or decrease the revenue received by orange juice sellers? If the price of orange juice decreases, revenue will __________________
increase
As you move up a linear demand curve, the price elasticity of demand in absolute value A. increases. B. decreases. C. stays the same. D. None of the above.
increases
According to an article in the Economist, when Chicago enacted a 1-cent-per-ounce tax on soda, "it was introduced to protect public health but its main purpose was to plug a $1.8bn hole in the [city's] budget." Source: "Chicago's Soda Tax Is Repealed," Economist, October 13, 2017. a. Did policymakers in Chicago believe that the demand for soda was price elastic or price inelastic? Given that policymakers in Chicago were expecting a substantial amount of revenue to
inelastic
Can the information in the quoted sentence tell us anything about the price elasticity of demand for iPhones? We can conclude that the demand for iPhones is price __________ because revenue increased when ______________
inelastic, price increased
The city's goals were in conflict because improving public health required having the decline in people buying soda be as ________ as possible, whereas raising revenue required having the decline in people buying soda be as __________ as possible. Because policymakers repealed the tax after it failed to raise the expected revenue, it seems likely that the policymakers were more interested ________________ .
large, small, raising revenue
In particular, the supply curve for a particular product will be increasingly more elastic over a ▼ longer shorter period of time.
longer
In the end, the tax raised less revenue than expected, and the tax was repealed. The demand for soda turned out to be _________elastic than policymakers had expected.
more
