Economics Chapter 4

Demand is income elastic if

a small percentage increase in income results in a large percentage increases in quantity demanded.

Dan sells newspapers. Dan says that a 4 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 8 percent. According to​ Dan, the demand for newspapers is​ ________.

elastic

The figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $4.00 to $3.50, then total revenue would ________ because demand is ________.

increase; elastic

The price elasticity of demand for furniture is estimated at 1.3. This value means a one percent increase in the

price of furniture will decrease the quantity of furniture demanded by 1.3 percent.

The income elasticity of demand is a measure of the responsiveness of the

quantity of a good demanded to changes in income

The elasticity of supply measures the sensitivity of

quantity supplied to a change in price

If hot dog vendors at baseball games want to maximize their total sales revenue, they will have to

set the price of their hot dogs so that the demand is unit elastic

A normal good is defined as a good for which the demand curve

shifts rightward as income increases

The price elasticity of demand measures

the responsiveness of the quantity demanded to changes in price

A 10 percent increase in the quantity of spinach results from a 20 percent decline in its price. The price elasticity on demand for spinach is

0.5

When the price of a movie ticket increases from $5 to $7, the quantity of tickets demanded decreases from 600 to 400 a day. What is the price elasticity of demand for movie tickets?

1.20

The figure represents the behavior of total revenue as price falls along a straight - line demand curve. What is the price elasticity of demand if total revenue is given by point f?

Demand is elastic

Supply is elastic if

a 1 percent change in price leads to a larger percentage change in quantity supplied.

Demand is unit elastic when

a change in the price of the product leads to no change in the total revenue

If the income elasticity for chocolate chip cookies is 1.84, then chocolate chip cookies are

a normal good and income elastic

If goods are complements, then their

cross elasticities are negative

The price elasticity of demand for DVDs is 2. If the price of a DVD increased by 2%, the quantity demanded will _________.

decrease by 4%

The figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $1.50 to $1.00, then total revenue would ________ because demand is ________.

decrease; inelastic

Donuts and coffee are complements. When the price of a donut increases, the demand for coffee ________ and the cross elasticity of demand for coffee with respect to the price of a donut is ________.

decreases; negative

The air route from Dallas to Mexico City is served by more than one airline. The demand for tickets from American Airlines for that route is probably

elastic and more elastic than the demand for all tickets for that route

The price elasticity of supply of laptop computers equals 1.5 if

for every 1 percent that laptop price increase, computer makers produce another 1.5 percent laptops

Bus rides and canned soup are inferior goods, so the ________ elasticity of demand is ________.

income; negative

If demand for Farmer John's maple syrup is inelastic, then when Framer John raises the price of maple syrup, his total revenue will

increase

If demand is inelastic, an increase in the price will

increase total revenue

The price of milk rises, so the supply of ice cream decreases. there is, as a result a 5 percent increase in the price of ice cream and a 3 percent decrease in the quantity of ice cream sold. The revenue received by ice cream suppliers will ________ because the demand for ice cream is ________.

increase; price inelastic

Aglets are the metal or plastic tips on shoelaces that make it easier to lace your shoes. The demand for aglets is probably

inelastic

The cross elasticity of demand measures the responsiveness of the quantity demanded of particular good to changes in the prices of

its substitutes and its complements

The income elasticity of demand is largest for

luxieries

When consumers' incomes increased 10 percent, the quantity of milk bought increased 5 percent. This result means

milk is necessity

The figure illustrates the demand curve for good. The good has

no substitutes

A university conducts a survey of students, which shows that a 10 percent tuition hike would lead to a 12 percent decrease in the enrollment. If the university wants to increase its total revenue, it should ________ tuition because the demand for education at this university is ________.

not raise; elastic

The price elasticity of supply is calculated as the

percentage change in quantity supplied divided by the percentage change in price

The price elasticity of demand is equal to the ________ in the​ ________ divided by the​ ________ in the​ ________.

percentage​ change; quantity​ demanded; percentage​ change; price

The figure represents the behavior of total revenue as price falls along a straight-line demand curve. Unit elasticity of demand occurs at

point h

Blue pens and black pens are close substitutes. The cross elasticity of demand for black pens with respect to the price of blue pens is _______.

positive

The table above gives the demand schedule for peas. As you move from point C to point D, the price elasticity of demand is

unit elastic

When consumers' incomes increased 6 percent, the quantity of wine bought increased 12 percent. This result means

wine is a luxury