Micro Quiz Chapter 5&7

Last year, Jim bought 8 tickets to sporting events when his income was $30,000. This year, his income is $33,000, and he purchased 10 tickets to sporting events. Holding other factors constant and using the midpoint method, it follows that Jim's income elasticity of demand is about

2.33, and Jim regards tickets to sporting events as normal goods.

If the price elasticity of demand for a good is 0.5, then a 5 percent increase in price results in a

2.5 percent decrease in the quantity demanded

Heath's income elasticity of demand for concerts is 2. All else equal, this means that if his income increases by 10 percent, he will purchase tickets for

20 percent more concerts.

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

3 percent increase in the quality demanded

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

3 percent increase in the quantity demanded

If the price elasticity of demand for a good is 1.2, then a 3 percent decrease in price results in a

3.6 percent increase in the quantity demanded.

If the price elasticity of demand for a good is 0.4, then which of the following events is consistent with a 2 percent decrease in the quantity of the good demanded

5 percent increase in the price of the good

Holding all other forces constant, if increasing the price of a good leads to a decrease in total revenue, then the demand for the good must be

Elastic

For prices above $5, demand is price

Elastic, and lowering price will increase total revenue.

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue

Great than one (2.6)

Food basics that have an inelastic demand from farms where government farm programs that pay farmers not to plant crops on all their land

Help farmers by increasing total revenue in the market but hurt consumers by raising food prices.

If price increases from $10 to $20, total revenue will

Increase by $120, so demand must be inelastic in this price range

f price increases from $10 to $20, total revenue will

Increase by $120, so demand must be inelastic in this price range.

Holding all other forces constant, if decreasing the price of a good leads to a decrease in total revenue then the demand for the good must be

Inelastic

The price elasticity of demand for bread is

Influenced by whether consumers view bread as a necessity or luxury.

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

-1.0 and X and Y are compliments

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

-1.0, and X and Y are complements.

Which of the following statements is valid when the market supply curve is vertical

Market quantity supplied does not change when the price changes

Which of the following is likely to have the most price elastic demand?

Microsoft® Surface tablets

Total revenue will be at its largest value on a linear curve at the

Midpoint of the curve

As the price elasticity of supply approaches infinity, very small changes in price lead to

Very large changes in quantity supplied.

An advance in farm technology that results in an increased market supply is

Bad for farmers because total revenue will fall but good for consumers because prices for food will fall

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. Your roommate still enjoys Ramen noodles very much and buys even more, but you plan to buy fewer Ramen noodles in favor of foods you prefer more. When looking at income elasticity of demand for Ramen noodles, yours would

Be negative and your roommate's would be positive

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles, yours would

Be positive and your roommate's would be negative

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

If the demand for textbooks is inelastic, then a decrease in the price of textbooks will

Decrease total revenue of textbook sellers.

Holding all other forces constant, if decreasing the price of a good leads to an increase in total revenue, then the demand for the good must be

Elastic

For which pairs of goods is the cross-price elasticity most likely to be negative?

Peanut butter and jelly

For which of the following goods is the price elasticity of demand most inelastic?

Pizza

Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9,

Quantity demanded changes proportionately less than the price.

Assume the section of the demand curve from A to B corresponds to prices between $8 and $16. then, when the price changes between $9 and $10

Quantity demanded changes proportionately more than the price

Suppose that corn farmers want to increase their total revenue. Knowing that the demand for corn is inelastic, corn farmers should

Reduce the number of acres on which they plant corn.

Refer to Table 5-11. Which scenario describes the market for oil in the short run in comparison to the long run?

Scenario D describes the short run, whereas scenario A describes the long run.

A key determinant of the price elasticity of supply is

The ability of sellers to change the amount of the good they produce.

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota where sufficient rainfall occurred

Their revenue increases increases because price increases and demand is inelastic

Which of the following is likely to have the most price inelastic demand

Toothpaste