Unit 1: Lesson 6

Burger King will sell 28% more burgers

Suppose the cross price elasticity between Burger King and McDonald burgers is 1.4. If McDonald's increases the price of their burgers by 20% then

substitutes; complements

Suppose the cross price elasticity of demand for butter and margarine is equal to .96 while the answer for water and lemon is -0.13. This means that butter and margarine are ___________ while water and lemon are _____.

1.6

n the accompanying table,. the price inelasticity of demand for pizza between prices of $14 and $12 per pizza when income is $1000 per month is :

perfectly elastic.

A demand curve that is parallel to the horizontal axis is:

graphs as a line parallel to the vertical axis.

A perfectly inelastic demand curve:

flatter

A supply curve that has a __________ slope represents a more elastic supply curve.

the price elasticity of demand is 2.25.

If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8, then:

not related.

If the cross-price elasticity of demand for two goods is zero, the two goods are

Price rises and demand is elastic.

In which of the following instances will total revenue decline?

inelastic.

Refer to the table. Over the $8-$6 price range, supply is:

price inelastic

Suppose the price elasticity of demand for cheeseburgers equals 0.37. This means the overall demand for cheeseburgers is:

-3

Suppose the price of IBM computers falls from $2,500 to $2,000 and the quantity demanded increases from 10,000 to 20,000. Calculate the price elasticity of demand.

1.2.

Suppose the price of local cable TV service increased from $16.20 to $19.80 and as a result the number of cable subscribers decreased from 224,000 to 176,000. Along this portion of the demand curve, price elasticity of demand is:

decrease price by 2.0%.

The ABC Computer Company wants to increase the quantity of computers it sells by 5%. If the price elasticity of demand is 2.5, the company must

percentage change in quantity demanded/percentage change in price.

The basic formula for the price elasticity of demand coefficient is:

coffee and sugar are complements

The cross price elasticity of sugar with respect to coffee has been estimated as being equal to -.5; This implies that

1.5

The income elasticity of demand for pizza at a price of $14 per pizza when income changes from $1000 to $1400 per month is:

20%

The only producer of chocolate bunnies in the world, Choco's Bunny Company recently expanded its production capacity from 1,000 bunnies per day to 2,000 bunnies per day. Supposing the price elasticity of demand for Bunnies is 3.33, if you use the midpoint method of estimating the price elastifcity of demand by how much will the company need to reduce its price to sell the additional 1,000 bunnies

0.21

The price elasticity of demand between $20 and $21 using the midpoint method is approximately

12 percent reduction in price.

The price elasticity of demand for widgets is 0.80. Assuming no change in the demand curve for widgets, a 16 percent increase in sales implies a:

0.15

When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price-elasticity of demand coefficient for this product is:

inelastic; increase

When the price of fresh fish increases 10%, quantity demanded decreases 5%. The price elasticity of demand for fresh fish is ________ and total revenue from fresh fish sales will ________.