Econ 102 plq 10 elasticity of demand

The price elasticity will tend to get more inelastic as one moves ____________ along a linear demand curve.

Up and to the left

In the example just mentioned, the person doing most of the traveling would be the person who is _________ in love.

most

If pizza and beer are considered complements, then the cross-price elasticity between pizza and beer will be:

negative

If roses and carnations are considered substitutes, then the cross-price elasticity between them will be:

positive

In recent years many new restaurants are opening around Collegetown. If you want to pay the lowest price possible for restaurant meals, should you hope that demand for restaurant meals is elastic or inelastic?

inelastic

In your college town, real estate developers are building thousands of new student-friendly apartments close to campus. If you want to pay the lowest rent possible, should you hope that demand for apartments is elastic or inelastic?

inelastic

You sell t-shirts in the street corner in order to support some of your tuition costs. Around the middle of the semester, your friend Carlos gives you the following advice: "if you increase the price of each t-shirt you sell you will be able to make a lot more money selling your t-shirts". For Carlos to be right, the price elasticity of t-shirts must be price:

inelastic When an increase in price results in greater revenue, this means that the decrease in quantity is smaller than the change in price. This means the good is inelastic.

If the quantity demanded of BBQ sandwiches falls by 5% every time the price increases by 10%, the price elasticity of demand for BBQ sandwiches is:

-0.5

If the quantity demanded of personal computers increases by 5% every time the price of personal computers decreases by 10%, the price elasticity of personal computers is (remember to report the absolute value):

0.5 Using the formula for elasticity of demand, 5% / 10% = 0.5.

Let's assume that the market price for gasoline in Chicago is currently $3.00. Now say that buyers of gasoline must pay a tax of $0.50 for every gallon of gasoline they buy. If the tax changes the equilibrium price of gasoline to $2.80/gallon, sellers will share _________ percent of the burden of this tax.

40

Let's assume that the market price for gasoline in Chicago is currently $3.00. Now say that buyers of gasoline must pay a tax of $0.50 for every gallon of gasoline they buy. If the tax changes the equilibrium price of gasoline to $2.75/gallon, sellers will share _________ percent of the burden of this tax.

50

Let's assume that the equilibrium price for gasoline in Chicago is currently $3.00. Now say that buyers of gasoline must pay a tax of $0.50 for every gallon of gasoline they buy. The result of this tax would be to __________ the demand curve for gasoline by ________.

Decrease; exactly $0.50

Which of the following may be a reason why the demand for food is more price inelastic than the demand for automobiles?

Food has fewer substitutes than automobiles.

Which of the following diagrams represent the good with the most price inelastic demand?

The steeper the demand curve, the more inelastic is its demand.

The government imposes a per-unit tax in both the market for gasoline and also the market for luxury cars. Which of these 2 taxes would have a larger effect on social welfare?

both the same

Which side of the market for gasoline is more inelastic: sellers or buyers of gasoline?

buyers

Which of these goods probably has a more price inelastic demand?

candy

If you increase the price of your product by 10% and, as a result, the quantity demanded changes by 15%, your total revenue will:

decrease

If the quantity demanded of BBQ sandwiches falls by 15% every time the price increases by 10%, the price elasticity of demand for BBQ sandwiches is:

elastic

Which of these 2 goods has a more price inelastic supply? housing or tobacco

housing

If the supply for marijuana goes down (maybe due to strong government enforcement) then the Total Revenue of those producers of marijuana that stay in the market will:

we can't say with the information provided