econ chapter 19
Price elasticity of demand is defined as
the percentage change in quantity demanded divided by the percentage change in price.
The price elasticity of demand is inelastic when the absolute value is less than one
inelastic
Mark is selling gourmet apples at a price of $4 per pound. Currently, he sells 200 pounds of apples per week. This week, Mark raises his price to $6, and his sales of apples fall to 175 lbs. Mark's initial revenue from apple sales was $__ Mark's new revenue from apple sales is $___ Since Mark's revenue increased when the price of apples rose, the demand for Mark's gourmet apples must be____
$800 $1050 inelastic
In the table, the cross price elasticity of demand for good C with good B when PB rises from $15 to $18 is
-1.10
Joe's Campus Grille priced its hamburgers at $2.00, they sold 200 per day. When the price was $3.00, they sold 150 per day. Based on this information and using the average-values formula, the absolute value of the price elasticity of demand for hamburgers is_______ Based on the above calculation, demand for hamburgers is considered to be
.71 inelastic
When income is $100 per week, 10 gallons of gas are demanded. When income is $140 per week, 15 gallons of gas are demanded. The income elasticity of demand for gallons of gas equals:
0.80
A firm changes the price of its product and its sales revenues don't change. The absolute value of the price elasticity of demand for its product must be
1.0
A student organization finds that when it prices logo emblazoned shirts at $12, the organization sells 200 per day. When the price is reduced to $10, the organization sells 250 per day. Based on this information, use the average-values formula to find the price elasticity of demand for logo emblazoned shirts. Provide the absolute value of the price elasticity of demand.
1.22
At a price of $15.50 to play 18 holes on a golf course, 140 consumers pay to play a game of golf each day. Increasing the price to $20.00 causes the number of consumers to decline to 100. what is the price elasticity of demand, expressed as a positive number? The demand is
1.32 elastic
Refer to the table at right. The price of B decreases from $18 to $15. What is the cross price elasticity of demand between B and A?
1.38
The quantity of raspberries sold at a local store increases from 100 pints to 1,500 pints when the price is reduced from $4.00 to $1.00. In this situation, the absolute price elasticity of demand for raspberries is approximately
1.46
Remembering that the price elasticity of demand is evaluated in terms of absolute values, which of the following is an example of an elastic demand?
1.5
At a price of $35 comma 000, producers of midsized automobiles are willing to manufacture and sell 80 comma 000 cars per month. At a price of $40 comma 000, they are willing to produce and sell 130 comma 000 a month. The price elasticity of supply is _______ Based on your answer, supply is____
3.7 elastic
t a price of $35 comma 000, producers of midsized automobiles are willing to manufacture and sell 80 comma 000 cars per month. At a price of $40 comma 000, they are willing to produce and sell 130 comma 000 a month. The price elasticity of supply is ______ Based on your answer, supply is_____
3.7 elastic
At Roy's Music Shack, when the price of CDs is $12, 400 are demanded. When the price of CDs is $13, 200 are demanded. Using the averages of the two prices and quantities, the price elasticity of demand for CDs is
8.3
Which of the following is true? f the income elasticity of demand for hot dogs is negative 2.00, hot dogs are_______ good and if the income elasticity of demand for lobster is 1.32, lobster is _____good.
ALL Income elasticity is negative for inferior goods where the quantity demanded falls as income rise. Income elasticity is positive for normal goods where the quantity demanded rises as income rises. Income elasticity is negative for inferior goods where the quantity demanded rises as income falls. Income elasticity is positive for normal goods where the quantity demanded falls as income falls. inferior, a normal
The price elasticity of demand for a particular commodity depends upon all of the following except
Wrong availability of complementary goods. Right the number of close substitutes for that commodity. the percentage of a consumer's total budget devoted to purchasing that commodity. the length of time allowed for price changes of that commodity.
If the income elasticity of a good is known to be +0.5, as income rises, consumers will buy _______of the good, and the proportion of the budget spent on the good will_____ . If the income elasticity of a good is known to be minus0.5, as income rises, consumers will buy______of the good. Goods of this type are called____
a greater quantity, decrease a smaller quantity, inferior
When personal income in the country rises, so do alcohol consumption and traffic fatalities. It can be said that
alcohol is a normal good and has a positive income elasticity of demand.
Total revenues are maximized
at the point of unit-elasticity on the demand curve.
A value of the absolute price elasticity of demand equal to 0.5 indicates that
a 10% increase in price leads to a 5% decrease in quantity demanded.
In the above figure, along which range would total revenue remain unchanged by raising prices?
between point c and point d
If one wanted to know the impact of the falling price of using the Internet on the demand for library services, one would need to compute the
cross price elasticity of demand for library services and price of using the Internet.
A firm could lower prices and still increase revenue if
demand is elastic.
A craftsman who makes guitars by hand finds that when he prices his guitars at $1 comma 300, his annual revenue is $3 comma 900. When he prices his guitars at $1 comma 200, his annual revenue is $4 comma 800. Over this range of guitar prices, does the craftsman face elastic, unit-elastic, or inelastic demand?
elastic
The price elasticity of demand is elastic when the absolute value is greater than one
elastic
Suppose that the cross price elasticity of demand between DVD's and DVD players is negative 0.10. What would you expect to happen to the sales of DVD players if the price of DVD's rises by 20 percent? The demand for DVD players would ____ he demand for DVD players would fall by_____%
fall 2.0
Suppose that the cross price elasticity of demand between movie tickets and popcorn is negative 0.30. What would you expect to happen to the sales of popcorn if the price of movie tickets rises by 30 percent? The demand for popcorn would_______ by_______%
fall 9.0
If the price elasticity of demand (Upper E Subscript p) equals one in the short run, then, other things being equal, in the long run Upper E Subscript p will be
greater than one
Based on only the information provided, characterize the demand for the following goods as being more elastic or more inelastic. a. A 45-cent box of salt that you buy once a year: b. A type of high-powered ski boat that you can rent from any one of a number of rental agencies: c. A specific brand of bottled water: d. Automobile insurance in a state that requires autos to be insured but has few insurance companies: e. A 75-cent guitar pick for the lead guitarist of a major rock band:
more inelastic more elastic more elastic more inelastic
The absolute value of the short-run elasticity of demand for bread has been estimated to be 0.15. Its long-run elasticity of demand is
more than 0.15 The longer any price change persists, the greater the price elasticity of demand, other things held constant.
It is very difficult to find goods with perfectly elastic or perfectly inelastic demand. We can, however, find goods that lie near these extremes. Characterize the demand for the following goods as being near perfectly elastic or near perfectly inelastic. a. Corn grown and harvested by a small farmer in Iowa____ b. Heroin for a drug addict _______ c. Water for a desert hiker____ d. One of several optional textbooks in a pass-fail course
near perfectly inelastic demand near perfectly inelastic demand near perfectly elastic demand near perfectly elastic demand
One would expect that the cross price elasticity of ski poles and skis would be
negative since they are complements.
For most goods and services the income elasticity of demand is____
positive
The income elasticity of a normal good is
positive
We generally expect the price elasticity of supply to be___
positive
George spends more than half of his monthly income on rent. Based only on this information, George's demand for rental housing would be expected to be____
relatively elastic
Inelastic demand implies
that a one percent increase in price results in a smaller than one percent decrease in quantity demanded.
When demand is unit-elastic, the percentage change in the quantity demanded is equal to the percentage change in price, so a change in price results in no change in total revenues.
unit-elastic
