Chapter 4 Homework Quiz

At a price of $150, a cell phone company manufactures 200,000 units. At a price of $250, the company manufactures 400,000 units. What is the price elasticity of supply? A. 0 B. 0.75 C. 0.80 D. 1.33

D. 1.33

Suppose the price that Rodale Press has set for Prevention magazine is elastic. How would an increase in price affect revenues? A. they would not change B. they would increase C. they would increase and then decrease D. they would decrease

D. they would decrease

An online advertising company sells small page ads or full page ads. The elasticity of demand for small page ads is -0.8 and the elasticity of demand for full page ads is -1.3. The company should A. Raise the price for small page ads and lower the price for full page ads. B. Raise the price for small page ads and keep the price the same for full page ads. C. Lower the price for small page ads and raise the price for full page ads. D. Lower the price for small page ads and keep the price the same for full page ads.

A. Raise the price for small page ads and lower the price for full page ads.

Which of the following goods is perfectly inelastic? A. a life-saving medication B. photocopies that cost 11 cents per copy at one copy shop and 10 cent per copy at this shop's competitor located next door C. a fast-food restaurant located in the food court of a shopping mall D. the water bill you pay

A. a life-saving medication

If a 20% increase in price causes a 30% drop in quantity demanded, this good is: A. elastic B. inelastic C. unitary

A. elastic

A local paintball business receives total revenue of $10,000 per month when it charges $12 person, and $15,000 in total revenue when it charges $8 per person. Over that range of prices, the business faces A. elastic demand B. unitary demand C. inelastic demand

A. elastic demand

Suppose the cross-price elasticity of demand between hot dog and mustard is -3.00. This implies that a 30 percent increase in the price of hot dogs will cause the quantity of mustard to A. fall by 300 percent. B. fall by 90 percent. C. rise by 10 percent. D. rise by 90 percent.

B. fall by 90 percent.

Which of the following goods is perfectly elastic? A. a life-saving medication B. photocopies that cost 11 cents per copy at one copy shop and 10 cent per copy at this shop's competitor located next door C. a fast-food restaurant located in the food court of a shopping mall D. the water bill you pay

B. photocopies that cost 11 cents per copy at one copy shop and 10 cent per copy at this shop's competitor located next door

College logo water bottles priced at $12 sell at a rate of 30 per week, but when the bookstore marks them down to $8, it finds that it can sell 45 water bottles per week. What is the price elasticity of demand for the water bottles? A. 1.60 B. -0.63 C. -1.00 D. -1.60

C. -1.00

Which of the following goods is relatively elastic? A. a life-saving medication B. photocopies that cost 11 cents per copy at one copy shop and 10 cent per copy at this shop's competitor located next door C. a fast-food restaurant located in the food court of a shopping mall D. the water bill you pay

C. a fast-food restaurant located in the food court of a shopping mall

A car rental agency lowers their rates by 10 percent. If the agency wants to recoup the income lost by lowering the prices and have total revenues at least as high as before, it needs sales to A. increase by 5 percent. B. increase by 10 percent. C. increase by 20 percent. D. decrease by ten percent.

C. increase by 20 percent

The owner of a John Deere dealership hires you to maximize the revenue from the DL007 model. Your advice would be to: A. set the price in the inelastic region in order to increase total revenue B. set the price in the elastic region in order to increase total revenue C. set the price in the unitary elastic region D. set the price in the elastic region and then move it to the inelastic region

C. set the price in the unitary elastic region