PrQ6: Practice Quiz - Ch. 6: Elasticity

(Figure: The Demand Curve for Lattes) Use Figure: The Demand Curve for Lattes. If the price is $5, total revenue is: Graph: D-Line (0, 10), (10, 0) 1/1

$25

The price of matcha tea increases by 10%, and as a result, Cassandra purchases fewer biscotti. For Cassandra, matcha tea and biscotti are:

complements.

(Table: Price Elasticity in the Market for Matcha Tea) Use Table: Price Elasticity in the Market for Matcha Tea. What is the price elasticity of demand, computed using the midpoint method, between $2.00 and $1.75?

3.00

(Figure: The Demand for Digital Movies) Use Figure: The Demand for Digital Movies. If the price of online movies increases from $6 to $8, total revenue _____, which means that demand is _____. Graph:

decreases; elastic

The price elasticity of demand for snowboarding lessons at Jay Peak resort in Vermont is greater than 1. This means that the demand for snowboarding lessons is _____.

elastic

It is very easy for Evelyn to find inexpensive inputs for her business. Evelyn's supply is therefore likely to be:

elastic.

If the income elasticity of electric cars is positive:

electric cars are a normal good.

The state of Texas recently saw a gasoline price increase of 5%, which brought about a fall in the quantity of gasoline purchased of 1%. The price elasticity of demand is equal to _____, and demand is described as _____.

0.2; inelastic

When the price of fountain pens decreases from $3 to $1, the quantity of fountain pens demanded increases from 100 to 200 pens. What is the price elasticity of demand, obtained using the midpoint method?

0.67

(Figure: The Demand for Winter Gloves) Use Figure: The Demand for Winter Gloves. The price elasticity of demand over the segment DE, computed using the midpoint method, is:

0.71.

(Table: Market for Mexican Take-Out) Use Figure: Market for Mexican Take-Out. If income is $1,000 per month, the price elasticity of demand for Mexican take-out meals between $14 and $12 per meal, computed using the midpoint method, is:

1.

If the price elasticity of demand for basketball shoes is 4:

a 20% decrease in the price of shoes will increase quantity demanded by 80%.

If the price elasticity of demand for cotton is 0.5, and the income elasticity of demand for cotton is 0.4:

a 50% increase in income will increase the quantity demanded of cotton by 20%.

A perfectly elastic supply curve is:

horizontal.

Each month, Evelyn spends exactly $50 on frappuccinos, regardless of the price. Evelyn's price elasticity of demand for frappuccinos is:

1.

(Figure: The Market for Chai Lattes) Use Figure: The Market for Chai Lattes. What is the price elasticity of supply between the prices of $2 and $2.50 per cup, using the midpoint method?

1.00

If the cross elasticity of demand between cheese and yogurt is positive, then:

cheese and yogurt are substitutes.

(Figure: The Linear Demand Curve for Golf Balls) Use Figure: The Linear Demand Curve for Golf Balls. If the price is initially $10, then falls to $9, this will result in a(n) _____ in quantity demanded and a(n) _____ in total revenue.

increase; decrease

Which factor does NOT determine the price elasticity of demand?

the slope of the supply curve

A demand curve that is perfectly inelastic is:

vertical.