Homework #3

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The​ cross-price elasticity of demand for peanut butter with respect to the price of jelly is minus−0.3. If we expect the price of jelly to decline by​ 15%, what is the expected change in the quantity demanded for peanut​ butter?

+4.5%

Which of the following represents the income elasticity of​ demand?

(ΔQ/ΔI)x (I/Q)

Which of the following represents the price elasticity of​ demand?

(ΔQ/ΔP) x (P/Q)

Between two points near​ D, demand is?

Unit elastic

Elasticity measures what?

The percentage change in one variable in response to a one percent increase in another variable.

The income elasticity of demand refers to?

The percentage change in quantity demanded resulting from a 1 percent increase in income.

The​ cross-price elasticity of demand refers to?

The percentage change in the quantity demanded of one good resulting from a 1 percent increase in the price of another good.

Along any​ downward-sloping, straight-line demand curve?

The price elasticity​ varies, but the slope is constant.

If a 33​-percent increase in the price of corn flakes causes aa 77​-percent decline in the quantity​ demanded, what is the elasticity of​ demand?

-2.33%

For U.S.​ consumers, the income elasticity of demand for fruit juice is 1.1. If the economy enters a recession next year and consumer income declines by​ 2.5%, what is the expected change in the quantity of fruit juice demanded next​ year?

-2.75%

Which of the following statements about the demand curve in the figure at right is​ true?

Demand becomes more inelastic as price declines.

At point​ A, demand is?

Infinitely elastic

If two goods are​ substitutes, the​ cross-price elasticity of demand must be?

Positive

Between points B and​ C, demand is?

elastic, but not infinitely elastic.

Between points E and​ F, demand is?

inelastic, but not completely inelastic.


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