ECON E 201 Assignment 3

The table shows the demand schedule for fried chicken. When the price of a basket of fried chicken rises from $ 14.00 to $ 16.00, what is the price elasticity of demand for fried chicken?

15

Which of the following is true?

For an interior good, when income increases, the demand curve shifts leftward

Which of the following is most likely to increase the price of personal computers in the short-run?

The development of personal computer software that makes it easier to use personal computers.

All grapefruit juice producers have decided to blend tangerine juice with the grapefruit juice. This blend results in a higher cost of production, but studies show that consumers prefer the taste of the blend to straight grapefruit juice. What will happen to the equilibrium price and quantity of the new "blended" grapefruit juice now that it costs more to produce but consumers like it better?

The price rises, but the effect on the quantity is uncertain

All shredded wheat producers have decided to add a new ingredient to shredded wheat, the "crunch enhancer." Crunch enhancer keeps cereals crisper longer in milk and, as a result, consumers decide they like shredded wheat more than before. What happens to the supply and demand curve for shredded wheat now that it costs more to produce and consumers like it better?

The supple curve shifts leftward and the demand curve shifts rightward

There is a technological advance in the production of a good and simultaneously also an increase in the expected future price. Which of the following will happen?

The technological improvement shifts the supply curve rightward while the increase in the expected future price shifts the supply curve leftward. The net effect is unknown

Which of the following shifts the supply curve for gasoline rightward?

a decrease in the price of a resource used to produce gasoline, such as crude oil

The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of

a decrease in the quantity demanded of cereal because of the substitution effect

Which of the following would result in a movement along, but no shift in, the supply curve of grapefruit juice?

a report by the U.S. Surgeon General that increased citrus consumption increases the likelihood of lower cholesterol levels, which decreases the risk of heart attacks

Which of the following leads to a movement along, but no shift in, the demand curve for spinach

a rise in the price

If shoes rise in price, the demand curve for shoes ______, and the quantity of shoes demanded_______.

does not shift;decreases

Draw a supply curve for sweaters and label it. Use any prices and quantities you wish but make your supply curve obey the law of supply. The law of supply states that other things remaining the same, the higher the price of a good, the _______; and the lower the price of a good, the _______.

greater is the quantity supplied; smaller is the quantity suppled

When David's income increases by 6 percent, his demand for tickets to professional baseball games increases by 3 percent. David's demand for tickets is income ______. For David, baseball tickets are ______ good.

inelastic; normal

The brazilian media reports that bad weather has destroyed one-third of this year's Arabica coffee crop. In the united States, which is a large importer of Arabica Coffee, the effect of the bad weather would

lower the equilibrium price of coffee pots, a coffee complement

William loves candy bars. As the price of a candy bar increases from​ $1.00 to​ $1.25 to​ $1.50, William continues to buy a dozen candy bars every week. ​William's demand for candy bars is​ _______.

perfectly inelastic

If, as the price of Coke decreases, the quantity of Pepsi that people buy decreases, then Coke and Pepsi are____.

substitute

When the price of air travel increases by 22 percent and the price of a train ride remains unchanged, the quantity of train rides demanded increases by 88 percent. Calculate the cross elasticity of demand of train rides with respect to air travel? The cross elasticity of demand of train ride with respect to air travel is ______

4

How does the price elasticity of demand influence total revenue when a price cut occurs? If a price cut increases total revenue, demand is________. If a price cut decreases total revenue, demand is______.

elastic; inelastic