ecc212 quiz5

The elasticity of demand for a good is |-0.75|. A 4 percent increase in price will cause a:

4*0.75=3 3 percent decrease in quantity demanded.

The price elasticity of demand measures how sensitive the:

quantity demanded is to a change in price.

The price elasticity of demand measures the

responsiveness of quantity demanded to a change in income.

If the cross-price elasticity of demand for two goods is 1.25, then Group of answer choices

the two goods are substitutes.

When small changes in price lead to infinite changes in quantity demanded, then the demand is perfectly

elastic, and the demand curve will be horizontal.

In the table above the income elasticity for margarine is _______ and margarine is found to be _________.

=((3-1)/((1+3)/2)/((50000-25000)/((50000+25000)/2))) =1.5 [1.5, normal good]

Refer to Figure 10. Total revenue when the price is P1 is represented by the area(s)

B + D.

Refer to Figure 2. As price falls from Pa to Pb, which demand curve represents the most elastic demand?

D1 (least slopey)

Refer to Figure 1. Between point B and point A, price elasticity of demand is equal to

Elasticity =(∆Q/∆P)*[(P1+P2)/(Q1+Q2)] E =[ (12-20)/(7-5)]*[(7+5)/(12+20)] E = -(8/2)*(12/32) = -12/8 =[-1.5]

In which of the following situations will total revenue increase?

Price elasticity of demand is 1.2, and the price of the good decreases. Price elasticity of demand is 3.0, and the price of the good decreases. Price elasticity of demand is 0.5, and the price of the good increases. [All of the above are correct]

Suppose demand is perfectly inelastic, and the supply of the good in question decreases. As a result,

the equilibrium quantity decreases, and the equilibrium price is unchanged.

The demand for Godiva mint chocolates is likely quite elastic because

the market is narrowly defined. this particular type of chocolate is viewed as a luxury by many chocolate lovers. there are many close substitutes. [All of the above are correct.]