ECON Chapter 4 Homework
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?