WSU chapter 5 econ 101

when laurens salary decreases from $40,000 to $30,000, she decides to reduce the number of outfits she purchased each year from 20 to 19. calculate laurens income elasticity of demand for new outfits

.18

consider the 2 markets: coffee and hot cocoa. the initial equilibrium for both markets is the same, P=$2.50, and Q=27 units. When the price is $6.75, the quantity supplied of coffee is 55 units and the quantity supplied of hot cocoa is 111 units. The demand for both goods is the same. What is the elasticity of supply for hot cocoa (round to 2 decimal places)? supply in the market for coffee is (more/less/same) elastic than supply in the market for hot cocoa. if the government put a price floor of $6.75 on both markets, which market would have a greater surplus or shortage?

1.32, less, hot cocoa would have a bigger surplus

the acmeville metropolitan bus service currently charges $0.77 for an all day ticket, and has an average of 623 riders a day. They are not profiting and cannot cut the number of buses on the road. They must find a way to increase revenues. They are considering increasing the ticket price to $0.99 and studies indicate this would reduce usage to 359 riders per day. calculate the absolute value of the price elasticity of demand dor bus tickets using the simple percentage change method. Price elasticity of demand=? Also, demand is (elastic/inelastic), so (increasing/decreasing) ticket prices will increase revenue.

1.5, elastic, decreasing

the cross-price elasticity of sassy cola and crinkly cola is .6, where the percentage change in quantity is for sassy cola and the percentage change in price is measured for crinkly cola. if the price of crinkly cola increases by 3% what will the percentage change in the quantity demanded of sassy cola be?

1.8

At the beginning of this year, daily consumption of gasoline in the US amounted to 344 million gallons. It is estimated that for every 10% increase in the price of gasoline, quantity demanded falls by 2.3%. By the end of this year, the price of gasoline is expected to increase by $0.4 from $3 per gallon. What is the expected quantity demanded for gasoline at the end of this year?

337.2 millions of gallons

In anticipation of a major hurricane hitting the gulf coast, the quantity of gasoline sales rise from 360 million gallons to 375 million gallons. What is the percent change in gasoline sales using midpoint formula?

4.1%

the cross-price elasticity of bows and violins is -.3, where the percentage change in quantity is for bows and the percentage change in price is measured for violins. calculate the percentage that the quantity demanded of bows will change if the price of violins decreases by 14%.

4.2

with fewer substitutes, demand tends to be (perfectly inelastic/more elastic/less elastic)

less elastic

a cheeseburger at 7pm at a 24hr restaurant is (more/less) elastic than a cheeseburger at 2am at a 24hr restaurant

more

cosmetic surgery is (more/less) elastic than emergency surgery

more

the supply of dried blueberries is (more/less) elastic than it is for fresh blueberries

more

the wall street journal is (more/less) than wall street journal at the airport

more

when cinema supreme decreases ticket prices by 26%, total revenue does not change. is it unit elastic, elastic, inelastic?

unit elastic

monthly electricity consumption is (more/less) elastic than year electricity consumption

less

the supply of Porsche automobiles is (more/less) elastic than it is for baseball caps

less

the supply of beef today is (more/less) elastic than it is for beef in a year

less

which example best represents perfectly inelastic supply? a) original paintings made by Leonardo da vinci (b) a restaurant willing to cater any number of dishes if the price is greater than $10 a plate (c) a good with no substitutes in consumption (d) the market for collectible trading cards

a

Penny is a consumer with a tight budget. The share of her budget spent on goods and services is significant in determining how well she is able to respond to price changes. Which good would you expect Penny's demand to be the most elastic; a roll of garbage bags, a cartridge of printer ink, a used car, or an iPhone?

a used car

CapCityMetro decides to increase bus fare rates by 10%. Consequently, the number of passengers who decide to take the bus in Austin drops from an average of 70,000 riders per day to 61,000 rides per day. Is it perfectly inelastic, perfectly elastic, unit elastic, elastic, or inelastic?

elastic

when roku, a device used to stream movies at home, increases prices by 54%, total revenue decreases by 69%. is it unit elastic, elastic, inelastic?

elastic

when demand is (inelastic/elastic) and price falls, total revenue (rises/falls/does not change)

elastic, rises

suppose that in a market for ice cream the elasticity of supply is equal to 1.50. how would a 10% increase in the price of ice cream affect he quantity of ice cream supplied? (increases/decreases) by ?

increases by 15

economists working for the united states have determined that the elasticity of demand for gasoline is .5. Is it perfectly inelastic, perfectly elastic, unit elastic, elastic, or inelastic?

inelastic

when bluebox, a dvd rental kiosk, increases its prices by 47%, total revenue increases by 31%. is it unit elastic, elastic, inelastic?

inelastic

all cars are (more/less) elastic than red cars

less

demand for a luxury item tends to be (less elastic/perfectly inelastic/more elastic)

more elastic

demand for an item that uses a large portion of your budget tends to be (less elastic/more elastic/perfectly inelastic)

more elastic

over long periods of time, demand tends to be (less elastic/perfectly inelastic/more elastic)

more elastic

Chelsey is a mother of 2 and buys her kids favorite, Kraft Mac and Cheese, when the price of Kraft is the same as the price of the store brand mac and cheese. But when there is a price difference, she buys the cheaper product. Is it perfectly inelastic, perfectly elastic, unit elastic, elastic, or inelastic?

perfectly elastic

Doug has diabetes as a result of too much candy and soda. he has to take insulin to control his blood glucose levels. over the range of prices they are likely to face, he and other diabetics continue to purchase insulin. Is it perfectly inelastic, perfectly elastic, unit elastic, elastic, or inelastic?

perfectly inelastic

land; elasticity of supply=0. is it perfectly inelastic supply, relatively inelastic supply, relatively elastic supply?

perfectly inelastic supply

you have been appointed head of marketing for barry's younique yachts. barry, the ceo, is interested in determining whether offering his yachts at a lower price would increase the firm's revenue. he asks you for advice: he should (reduce/increase) his prices. if increase, they are (elastic/inelastic). if reduce, they are (luxury good/necessity).

reduce, luxury good. they exhibit a high price elasticity of demand and reducing prices would increase revenue.

taco trucks; elasticity of supply=1.6. is it perfectly inelastic supply, relatively inelastic supply, relatively elastic supply?

relatively elastic supply

parking structures; elasticity of supply=0.4. is it perfectly inelastic supply, relatively inelastic supply, relatively elastic supply?

relatively inelastic supply

strip malls; elasticity of supply=0.8. is it perfectly inelastic supply, relatively inelastic supply, relatively elastic supply?

relatively inelastic supply

Contain yourself!, a Tupperware depot, raises the price of its signature lunchbox Tupperware from $3 to $4. As a result, sales of its Tupperware drop from 20,000 units to 15,000 units. Is it perfectly inelastic, perfectly elastic, unit elastic, elastic, or inelastic?

unit elastic