Microeconomics Ch. 4 Quiz
The table gives some data on the supply of roses in a small town. When the price rises from $15 a dozen to $25 a dozen, the elasticity of supply is _______.
0.80
Which of the following statements describes a perfectly inelastic demand?
Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price.
A rise in the price of a smoothie from $2 to $3 results in a decrease in the quantity of smoothies demanded from 220 million to 180 million a day and at today's price of a muffin, $1.50, the quantity of muffins demanded increases from 80 million to 100 million a day. 1. Calculate the percentage change in the price of a smoothie and the percentage change in the quantity demanded of smoothies. Hint: Use the average price and average quantity to calculate the percentage changes. The price of a smoothie changes by __ percent and the quantity demanded of smoothies changes by __ percent. 2. Calculate the price elasticity of demand for smoothies. The price elasticity of demand for smoothies is __. 3. Is the demand for smoothies elastic or inelastic? The demand for smoothies is ______.
40; 20; 0.5; inelastic
The total revenue test is a method of estimating the price elasticity of demand by observing the ______ that results from ______, when all other influences on the quantity sold remain the same.
change in total revenue; a change in the price
If the cross elasticity of demand for sports cars with respect to the price of a gallon of gas is negative, then sports cars and gasoline are ______.
complements
Demand is elastic if a price ___ increases total revenue.
cut
Demand is unit elastic if a price _________ leaves total revenue unchanged.
cut or rise
The demand curve for bus rides is a downward-sloping straight line. The price elasticity of demand for bus rides _______.
decreases as the price of a bus ride falls
When the price of tomatoes rises from $3 per pound to $4 per pound, the quantity of tomatoes sold decreases from 15 pounds to 10 pounds. Total revenue _____, and using the total revenue test, we can determine that the demand for tomatoes is _____ .
decreases from $45 to $40; elastic
The closer the substitutes for a good or service, the more ______ is demand.
elastic
The greater the proportion of income spent on a good, the more ______ is demand.
elastic
The longer the time that has elapsed since a price change, the more ______ is demand.
elastic
The greater the amount of time available after a price change, the ______ is the elasticity of supply.
greater
The income elasticity of demand is a measure of the responsiveness of the demand for a good or service to a change in ______, other things remaining the same.
income
Webster Dictionaries and Oxford Dictionaries are almost perfect substitutes. The price elasticity of demand for Webster Dictionaries _______.
is almost infinity
Goods and services that use rare resources in their production have a ______ elasticity of supply.
low
This year Americans are taking fewer exotic holidays by air and instead are visiting local scenic places by car. The global financial crisis has encouraged many Americans to cut their holiday budgets. Given the prices of the two holidays, the income elasticity of demand for exotic holidays is ______ and the income elasticity of demand for local holidays is ______.
positive; negative Exotic holidays are a normal good and local holidays are an inferior good.
The cross elasticity of demand is a measure of the responsiveness of the demand for a good to a change in the ______, other things remaining the same.
price of a substitute or complement
Demand is inelastic if a price ____ increases total revenue.
rise
If the cross elasticity of demand for ramen noodles with respect to the price of rice is positive, then ramen noodles and rice are ______.
substitutes
The elasticity of supply is calculated by dividing ______ by ______.
the percentage change in the quantity supplied; the percentage change in the price
Elasticity of supply measures the responsiveness of the quantity supplied to a change in ______, when all other influences on selling plans remain the same.
the price of a good
"During the recession, Wal-Mart moved its pet food and supplies to the front with its other fast-growing business, baby products. Retail experts point out that kids and pets tend to be fairly recession-resistant businesses long dash—even in a recession, dogs will be fed and kids will get their toys." The news clip implies that the demand for pet food and baby products is income ______. The income elasticity of demand for pet food and baby products is ______ than 1.
inelastic; less
