Quiz 5

Billy Bob's Barber Shop knows that a five percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop?

3.0

When demand is inelastic:

consumers are not very responsive to changes in price.

A ten percent increase in the price of soda leads to a twenty percent increase in the quantity of iced tea demanded. It appears that:

cross-price elasticity of demand for iced tea is -2.

A price cut will increase the total revenue a firm receives if the demand for its product is:

elastic

Demand is said to be ? when the quantity demanded is very responsive to changes in price

elastic

If the demand curve is perfectly elastic, then an increase in supply will:

increase the quantity exchanged but result in no change in the price

The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, and economist would advise:

increasing the price of the game tickets because demand is inelastic.

The elasticity of supply is defined as the ? change in quantity supplied divided by the ? change in price.

percentage; percentage

The price elasticity of demand measures the:

responsiveness of quantity demanded to change in price

Demand is said to be ? when the quantity demanded changes at the same proportion as the price.

unit elastic