Homework #3
The cross-price elasticity of demand for peanut butter with respect to the price of jelly is minus−0.3. If we expect the price of jelly to decline by 15%, what is the expected change in the quantity demanded for peanut butter?
+4.5%
Which of the following represents the income elasticity of demand?
(ΔQ/ΔI)x (I/Q)
Which of the following represents the price elasticity of demand?
(ΔQ/ΔP) x (P/Q)
Between two points near D, demand is?
Unit elastic
Elasticity measures what?
The percentage change in one variable in response to a one percent increase in another variable.
The income elasticity of demand refers to?
The percentage change in quantity demanded resulting from a 1 percent increase in income.
The cross-price elasticity of demand refers to?
The percentage change in the quantity demanded of one good resulting from a 1 percent increase in the price of another good.
Along any downward-sloping, straight-line demand curve?
The price elasticity varies, but the slope is constant.
If a 33-percent increase in the price of corn flakes causes aa 77-percent decline in the quantity demanded, what is the elasticity of demand?
-2.33%
For U.S. consumers, the income elasticity of demand for fruit juice is 1.1. If the economy enters a recession next year and consumer income declines by 2.5%, what is the expected change in the quantity of fruit juice demanded next year?
-2.75%
Which of the following statements about the demand curve in the figure at right is true?
Demand becomes more inelastic as price declines.
At point A, demand is?
Infinitely elastic
If two goods are substitutes, the cross-price elasticity of demand must be?
Positive
Between points B and C, demand is?
elastic, but not infinitely elastic.
Between points E and F, demand is?
inelastic, but not completely inelastic.
