BECO HW2

If a 16 percent increase in price for a good results in a 7 percent decrease in quantity demanded, the price elasticity of demand is (please use the Algebraic Point formula and insert your solution as a positive number)

.4375

Moving from point A to point B, the price elasticity of demand is equal to (please use the Midpoint formula and insert your solution as a positive number) Point A.) Price(7) Quantity(12) Point B.) Price(5) Quanitity(20)

1.51

Price QuantityDemanded (Dollars Per Unit)(Units) 200 0 160 30 120 60 80 90 40 120 0 150 Refer to the above table. If the price falls from $160 to $120, the price elasticity of demand is (please use the Midpoint formula and insert your solution as a positive number)

2.33

The section of the demand curve at point B represents the a.)unit elastic section of the demand curve b.)elastic section of the demand curve c.)inelastic section of the demand curve d.)perfectly elastic section of the demand curve

The point is directly in the middle of the demand line meaning it is unit elastic

If the price increases in the region of the demand curve between points C to B, we can expect total revenue to a.)increase b.)stay the same c.)decrease d.)first decrease, then increase until total revenue is maximized

a.) increase

Goods with many close substitutes tend to have a.) more elastic demands b.) less elastic demands c.) price elasticities of demand that are unit elastic d.)income elasticities of demand that are negative

a.) more elastic demands

When the price of candy bars is $1.20, the quantity demanded is 490 per day. When the price falls to $1.00, the quantity demanded increases to 500. Given this information, we know that the demand for candy bars is (please use the Midpoint formula) A.)inelastic b.)elastic c.)unit elastic d.)perfectly inelastic

a.)inelastic

When large changes in price lead to no changes in quantity demanded, demand is perfectly a.)inelastic, and the demand curve will be vertical b.)inelastic, and the demand curve will be horizontal c.)elastic, and the demand curve will be vertical d.)elastic, and the demand curve will be horizontal

a.)inelastic, and the demand curve will be vertical

If the cross-price elasticity between goods A and B is negative, we know the goods are a.)inferior goods b.)complements c.)inelastic d.)substitutes

b.) complements

Assume that the price elasticity of demand is 2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to a.)decrease b.)increase c.)remain constant d.)either increase or remain constant, depending upon the size of the price increase

b.) increase

Lemonade, a good with many close substitutes, should have an own price elasticity that is a.)unit elastic b.)relatively elastic c.)relatively inelastic d.)perfectly inelastic

b.) relatively elastic

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a (please use the Algebraic Point formula) a.)0.25 percent decrease in the quantity demanded b.)2.00 percent decrease in the quantity demanded c.)50.00 percent decrease in the quantity demanded d.)100.00 percent decrease in the quantity demanded

c.) 50.00 percent decrease in the quantity demanded

An income elasticity less than zero tells us that the good is a.)a normal good b.)a Giffen good c.)an inferior good d.)an inelastic good

c.) an inferior good

If apples have an own price elasticity of 1.2 we know the demand is a.)unit elastic b.)indeterminate c.)elastic d.)inelastic

c.) elastic

Refer to the above points. Between point A and point B on the graph, demand is (please use the Midpoint formula) a.) perfectly elastic b.) inelastic c.) unit elastic d.) elastic, but not perfectly elastic

c.) unit elastic

If the price elasticity of demand for steak is 0.4, an increase in price will lead to a.)a reduction in total revenue b.)an increase in total revenue c.)no change in total revenue d.)an increase or decrease in total revenue

d.) an increase or decrease in total revenue

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease total revenue? a.)2.5 b.)3.3 c.)1 d.)0.8

d.)0.8

Refer to the above table. If the price falls from $160 to $120, the price elasticity of demand is (please use the Midpoint formula) a.)zero b.)unit elastic c.)inelastic d.)elastic

d.)elastic

The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is a.)elastic b.)unit elastic c.)falling d.)inelastic

d.)inelastic