chapter 4 practices

If the price elasticity of demand for used cars priced between $4,000 and $6,000 is -1.2 (using the mid-point method), what will be the percent change in quantity demanded when the price of a used car falls from $6,000 to $4,000?

elasticity= 1.2 % change in price= [(6000-4000)/6000] x 100 = 33.33% percent change in demand= 1.2 x 33.33 = 40%

Which of the following has a more elastic demand in the short run? a. Pomegranate juice or drinking water b. Cereal or Rice Krispies cereal c. Speedboats or gourmet chocolate

a. Pomegranate juice b. Rice Krispies c. Speedboats

When the price of a bar of chocolate is $1.00, the quantity demanded is 100,000 bars. When the price rises to $1.50, the quantity demanded falls to 60,000 bars. Calculate the price elasticity of demand using the mid-point method. a. Suppose the price increases from $1.00 to $1.50. b. Suppose the price decreases from $1.50 to $1.00.

a. The price elasticity of demand is: -1.25 b. The price elasticity of demand is: -1.25

a. If price elasticity of demand is −1.3 and price increases by 2 percent, quantity demanded will b. If price elasticity of demand is −0.3 and price decreases by 2 percent, quantity demanded will

a. decrease by > 2 percent b. increase by < 2 percent

a. If price increases by 10 percent and quantity demanded decreases by 15 percent, demand is b. If price decreases by 10 percent and quantity demanded increases by 5 percent, demand is

a. elastic b. inelastic

a. If price increases by 10 percent and quantity supplied increases by 15 percent, supply is b. If price decreases by 10 percent and quantity supplied decreases by 5 percent, supply is

a. elastic b. inelastic

a. If price elasticity of supply is 1.3 and price increases by 2 percent, quantity supplied will b. if price elasticity of supply is 0.3 and price decreases by 2 percent, quantity supplied will

a. increase by > 2 percent b. decrease by < 2 percent

Which of the following has a more elastic supply in the short run? a. Hospitals or mobile clinics b. Purebred dogs or mixed-breed dogs c. On-campus courses or online courses

a. mobile clinics b. mixed-breed dogs c. online courses

a. If income increases by 10 percent and the quantity demanded of a good then increases by 5 percent, the good is: b. If income increases by 10 percent and the quantity demanded of a good then decreases by 20 percent, the good is:

a. normal and income-inelastic b. inferior and income-elastic

For each of the following pairs, predict whether the cross-price elasticity of demand will be positive or negative: a. Soap and hand sanitizer b. CDs and MP3s c. Sheets and pillowcases

a. positive b. positive c. negative

60 100 50 150 demand is ______ and total revenue ______

elastic, increases