Microeconomics Quiz 5 (Part 2 of Exam)

remain constant

If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would

the percentage change in quantity demanded is equal to the percentage change in price

If the demand for a steak is unit elastic, then

8 units of utility

The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is

more price elastic is a consumer's demand.

The larger the share of a good in a consumer's budget, holding everything else constant, the

price per unit times quantity sold

Total revenue equals

the slope of the demand curve

Which of the following is not a determinant of a good's price elasticity of demand?

cholesterol medication in general

Which of the following products comes closest to having a perfectly inelastic demand?

horizontal

A perfectly elastic demand curve is

has a large number of substitutes

A demand curve that is horizontal indicates that the commodity

perfectly inelastic

At a price of $8 per dozen, Chuy sells 40 dozen homemade tamales per week. When he raised his price to $12 per dozen, he still sold 40 dozen per week. Based on this information, the demand for his tamales is

inelastic

Based on the information above, the demand for hotel rooms is

0.5

Calculate the income elasticity if an 8 percent increase in income leads to a 4 percent increase in quantity demanded for organic produce.

percentage change in quantity demanded of one good divided by percentage change in price of a different good.

Cross-price elasticity of demand is calculated as the

1.62

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? Use the midpoint formula.

relatively elastic

If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded, then the demand for golf balls is

unit elastic

If a firm lowered the price of the product it sells and found that total revenue did not change, then the demand for its product is

infinity

If demand is perfectly elastic, the absolute value of the price elasticity coefficient is

will decrease by 45 percent.

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded

vertical

If the price elasticity of demand for insulin is equal to zero then the demand curve for insulin is

we don't know whether the demand is elastic or inelastic

If the slope of a demand curve is equal to -0.1 then

one that sells a luxury good

If you expect the economy is going to experience a boom and average income in the economy will rise in the foreseeable future, the type of firm that would be able to increase its sales if your expectations are met is

change in buyers' incomes.

Income elasticity measures how a good's quantity demanded responds to

a diabetic's demand for insulin

Of the following, which is the best example of good with a perfectly inelastic demand?

vertical; downward sloping

Perfectly inelastic demand is represented by a demand curve which is ________, and relatively inelastic demand is represented by a demand curve which is ________.

Peet's Coffee, coffee, hot beverages

Rank these three items in terms of the elasticity of the demand for them at any given price, from more elastic to more inelastic:

3.125

Refer to Figure 6-3. Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f.

D1 is more elastic than D2 or D3

Refer to Figure 6-6. As price falls from PA to PB, the quantity demanded increases the most along D1; therefore

A 1 percent increase in income leads to a 5 percent increase in wine consumption

Studies show that the income elasticity of demand for wine is approximately five. What does this mean?

the measurement of slope is sensitive to the units chosen for price and quantity

The slope of a demand curve is not used to measure the price elasticity of demand because

Consumers are largely unresponsive to per unit price change.

The demand for a product is inelastic with respect to price if

buyer responsiveness to price changes

The price elasticity of demand coefficient measures

2.5 percent

The price elasticity of demand for Stork ice cream is -4. Suppose you're told that following a price increase, quantity demanded fell by 10 percent. What was the percentage change in price that brought about this change in quantity demanded?

Positive, indicating substitute goods

We would expect the cross elasticity of demand between Pepsi and Coke to be

the percentage change in quantity demanded exactly offsets the percentage change in price

When demand is unit elastic, a change in price causes total revenue to stay the same because

inelastic

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent. This indicates that the demand for tortilla chips is

relatively inelastic

When there few close substitutes available for a good, demand tends to be

bread

Which of the following goods would have the most inelastic demand?

a vacation home in the Swiss Alps

Which of the following items is likely to have the highest income elasticity of demand?

Demand is more elastic in the long run than it is in the short run.

Which of the following statements about the price elasticity of demand is correct?

It has become more price elastic

With the increased usage of cell phone services, what has happened to the price elasticity of demand for land-line telephone services?