Micro (hw3)

A good will have a more inelastic demand, the a. longer the period of time. b. broader the definition of the market. c. more it is regarded as a luxury. d. greater the availability of close substitutes.

b. broader the definition of the market.

The demand for grape-flavored Hubba Bubba bubble gum is likely a. elastic because the market is broadly defined. b. elastic because there are many close substitutes for grape-flavored Hubba Bubba. c. inelastic because the market is broadly defined. d. inelastic because there are many close substitutes for grape-flavored Hubba Bubba .

b. elastic because there are many close substitutes for grape-flavored Hubba Bubba.

When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is a. 0.67, and an increase in price will result in an increase in total revenue for good A. b. 1.50, and an increase in price will result in an increase in total revenue for good A. c. 0.67, and an increase in price will result in a decrease in total revenue for good A. d. 1.50, and an increase in price will result in a decrease in total revenue for good A.

a. 0.67, and an increase in price will result in an increase in total revenue for good A.

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is a. inelastic. b. elastic. c. perfectly inelastic. d. unit elastic.

a. inelastic.

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. Using the midpoint method, we can conclude that for Heather, macaroni a. is an inferior good and soy-burgers are normal goods; both have income elasticities of 1. b. is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1. c. and soy-burgers are both normal goods with income elasticities equal to 1. d. and soy-burgers are both inferior goods with income elasticities equal to -1.

b. is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1.

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that a. the mayor thinks demand is elastic, and the city manager thinks demand is inelastic. b. the mayor thinks demand is inelastic, and the city manager thinks demand is elastic. c. both the mayor and the city manager think that demand is inelastic. d. both the mayor and the city manager think that demand is elastic.

b. the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.

If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in a. higher prices and higher total revenue from marijuana sales. b. the same price and higher total revenue from marijuana sales. c. the same price but lower total revenue from marijuana sales. d. higher prices but lower total revenue from marijuana sales.

b. the same price and higher total revenue from marijuana sales.

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is a. somewhat inelastic, but not perfectly inelastic. b. unit elastic. c. perfectly elastic. d. perfectly inelastic.

b. unit elastic.

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the a. closer to the vertical axis the demand curve will sit. b. steeper the demand curve will be. c. flatter the demand curve will be. d. further to the right the demand curve will sit.

c. flatter the demand curve will be.

Skip's Sealcoating Service increased its total monthly revenue from $12,000 to $13,500 when it raised the price of driveway repairs from $600 to $750. The price elasticity of demand for Skip's Sealcoating Service is a. 2.11. b. 1.12. c. 0.11. d. 0.47.

d. 0.47.

In January, the price of dark chocolate candy bars was $2.00, and Willy's Chocolate Factory produced 80 pounds. In February, the price of dark chocolate candy bars was $2.50, and Willy's produced 110 pounds. In March, the price of dark chocolate candy bars was $3.00, and Willy's produced 140 pounds. Using the midpoint method, the price elasticity of supply of Willy's dark chocolate candy bars was about a. 0.88 when the price increased from $2.00 to $2.50 and 1.08 when the price increased from $2.50 to $3.00. b. 1.50 when the price increased from $2.00 to $2.50 and 1.18 when the price increased from $2.50 to $3.00. c. 0.70 when the price increased from $2.00 to $2.50 and 0.76 when the price increased from $2.50 to $3.00. d. 1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00.

d. 1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00.

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by a. 250 percent. b. 30 percent. c. 80 percent. d. 40 percent

d. 40 percent

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded? a. A 7.5 increase in the price of the good b. An increase in the price of the good from $7.50 to $10 c. An increase in the price of the good from $10 to $17.50 d. A 13.33 percent increase in the price of the good

d. A 13.33 percent increase in the price of the good

Which of the following is not a determinant of the price elasticity of demand for a good? a. The time horizon b. The definition of the market for the good c. The availability of substitutes for the good d. The steepness or flatness of the supply curve for the good

d. The steepness or flatness of the supply curve for the good

The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10 percent. Refer to Scenario 5-2. The equilibrium price will a. increase in the aged cheddar cheese market and decrease in the bread market. b. decrease in the aged cheddar cheese market and increase in the bread market. c. increase in both the aged cheddar cheese and bread markets. d. decrease in both the aged cheddar cheese and bread markets.

d. decrease in both the aged cheddar cheese and bread markets.