Module 6 Quiz

for which of the following goods would you expect the demand to be most elastic? a) Sheetz gasoline b) BP gasoline c) gasoline d) a and b

a and b

The demand for which one of the following goods is most likely to be quite inelastic? a) fresh green peas b) provolone cheese c) General Electric television sets d) a defense lawyer

a defense lawyer

when economists say the demand for a good is highly inelastic, they mean that

a large (percentage) change in the price of a good will result in only a small (percentage) change in the quantity demanded

If you compared the short-run demand and long-run demand for education at your WVU, you would almost certainly find that

a tuition increase would reduce enrollment more in the long run than in the short run

the demand curve for a good is very unlikely to be perfectly vertical because

a. scarcity and limited income restrict the ability of consumers to afford goods as they become very expensive & b. as the price of a good rises to high enough levels the incentive for other supplies to invent new substitutes for the good increases

a good that takes up a very large percentage of the consumer's budget will tend to have

an elastic demand

Compared to the long run, consumers typically ______ to price changes in the short run.

are less demand sensitive

the price elasticity of demand for a commodity is determined primarily by the

attractiveness of the substitutes for the good

for which of the following goods would you expect the demand to be most elastic? a) salt b) gasoline, short run c) automobiles d) Chevrolet automobiles

chevrolet automobiles

of the following goods, which is mostly likely to have the lowest (most inelastic) elasticity of demand? a) coffee b) Chevrolet automobiles c) fresh tomatoes d) provolone cheese

coffee

which of the following is true regarding the price elasticity of demand? a) demand is generally more elastic in the long run than in the short run b) along a single demand curve, demand elasticity decreases as you move down the curve (to lower prices). c) a demand curve that is flatter (has less steep slope) is relatively more elastic than a demand curve that has a steeper slop

d) all of the above

If Pizza Al's reduces its pizza prices by 15 percent, and as a result, its total revenue from sales increases, this indicates that the price elasticity of demand for the firm's pizza was

elastic

suppose Microsoft announces it is cutting the prices of some of its software titles (mainly games) by 25 percent. Assuming that Microsoft is seeking to increase revenues, it must believe that the elasticity of demand for these products is

elastic

why do economists use the concept of elasticity in addition to measurement of the slope of the demand curve?

elasticities are independent of the units of measure

In heavily Catholic cities like Cincinnati. which of the following goods is likely to have more inelastic demand compared to cities with fewer Catholics? a) tacos b) fish c) asparagus d) ritabaga

fish

The demand for which of the following will be most inelastic? a) black-eyed peas b) peas c) vegetables d) food products

food products

The demand for which of the following is most likely to be highly elastic? a) gasoline b) fresh green spinach c) tickets to the Super Bowl d) the services of a physican

fresh green spinach

Suppose the WVU athletic department wanted to increase revenues by decreasing ticket prices to football games. This would make sense only if the price elasticity of demand for football games was (in absolute value)

greater than 1

the greater the price elasticity of demand, the

greater the responsiveness of quantity demanded to a change in price

The demand for which of the following is most likely to be highly inelastic? a) fresh green beans b) Old Navy brand shirts c) health-care services d) haircutting services

health-care services

the price elasticity of demand for a product tends to be large (more elastic) when

people spend a large share of their income on the produce

the figure above depicts a demand curve with a price elasticity that is

perfectly inelastic, implying that the same amount will be purchased regardless of the price of the good

for which of the following goods would you expect the demand to be most inelastic? a) taco bell b) taco johns c) chipotle d) tacos

tacos

Julia knows the price elasticity of movie rentals is 3. She know, therefore, that if she raises her price from $2 to $2.50, her rentals will drop by approximately a) 150 percent b) 100 percent c) 66 percent d) 33 percent

66 percent

if consumers would be willing to purchase the same quantity of a good no matter what its price was, the demand curve would

be a vertical line, indicating the demand is perfectly inelastic

holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

buyers tend to be much more sensitive to a change in price when given more time to react

A recent study on enrollment at a liberal arts college concluded that demand elasticity is 0.91. The administration is considering a tuition increase to help balance the budget. The revenue-maximizing decision is to

increase tuition, which would generate more revenue

If the demand for a good is elastic, then total revenue

increases as price decreases

If Pizza Al's increases its prices by 10 percent, and as a result, its sales revenues increases by 3 percent, the price elasticity of demand for the services offered by the restaurant must be

inelastic

Suppose a city that operates local electric and natural gas companies wants to raise revenues by increasing its rates for electricity and natural gas. The price rise will increase city revenues if the elastic of demand for electricity and natural gas is

inelastic

If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the Pepsi-Cola company could increase its total revenue by:

lowering price

A successful advertising campaign would likely

reduce price elasticity of demand by stressing the uniqueness of the product

If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good, demand is said to be

relatively inelastic

the price elasticity of demand for gasoline measures the

responsiveness of customers to changes in the price of gasoline

Which of the following goods would likely have the most inelastic demand? a) Kellogg's corn flakes b) salt c) a new Toyota automobile d) fresh green beans

salt

the more broadly a good is defined,

the fewer substitutes it has so the less elastic its demand

demand will be more elastic,

the larger the number of good substitutes

along the inelastic portion of a demand curve,

the percentage change in price will be more than the percentage change in quantity demanded

demand will be more inelastic,

the shorter the time the consumer has to adjust to price changes

Elaine, a small grocer, is planning to cut certain prices to increase her sales revenues. What will be the likely result of a price decrease for matches, a good for which demand is inelastic, and a price decrease for fresh green tomatoes, an item for which consumer demand is elastic?

the total revenue derived from matches will decline, but total revenues derived from tomatoes will increase