ECO 202 7
If the price elasticity of demand for a canned soup is estimate at -1.62. What happens to sales revenue if the price of canned soup rises
It falls
Refer to Figure 6-4. The inelastic segment of the demand curve
Lies below the midpoint of the curve
Refer to Figure 6-1. A perfectly inelastic demand curve is show in which Panel?
Panel A
Figure 6-10. A perfectly elastic supply curve is shown in
Panel B
If the price of a good is raised and total revenue increases, demand is inelastic.
True
If the cross-price elasticity of demand between beer and wine is 0.31, then beer and wine are
substitues
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 of elasticity of demand? Use the midpoint formula
1.62
Refer to Figure 6-11. What is the value of the price elasticity of supply between g and h?
2
Which of the following would result in a higher absolute value of the price of elasticity of demand for a product
A wide variety of substitutes are available for the good
Suppose a frost destroys the tomato crop in California but farmer see an increase in their revenues. Which of the following explains this?
The demand for tomatoes is price inelastic.
Suppose the demand curve for a product is represented by a typical downward-sloping curve. Now suppose the demand for this product increases. Which of the following statements accurately predicts the resulting increase in price?
The more elastic the supply curve, the smaller the price increase
Consider the follow pair of items: a. shampoo and conditioner b. iPhones and earbuds c. a laptop computer and a desktop computer d. beef and pork e. air-travel and weed killer Which of the pairs listed will have a negative-cross price elasticity
a and b only
Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09. This means that
an increase in the price of beer will lead to increase in revenue for beer sellers and beer is a normal good.
Demand for a luxury item, such as a yacht, is likely to be
both income elastic and price elastic
If the price of steel increases drastically, the quantity of the steel demanded by the building industry will fall significantly over the long run because
buyers of steel are more sensitive to a price change if they have more time to adjust to the price change
Income elasticity measures how a good's quantity demanded responds to
change in buyer's incomes
Which of the following products comes closet to having a perfectly inelastic demand
cholesterol medication in general
If at a price of $24, Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids, the demand for her orchids is
elastic
Table 6-6. Based on the data in the table between a price of $9.99 and $14.99, the demand for books is
elastic
The price of elasticity of an upward sloping supply cover is always
positive
If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would
remain constant
Most people buy salt infrequently and in small quantities. Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt. Therefore
the demand for salt is relatively inelastic
If the demand for cell phone service is inelastic, then
the percentage change in quantity demanded is less than the percentage in price (in absolute value)
Total revenue is equal to
the price of a product multiplied by the number of units of the product sold
The income elasticity of demand measures
the responsiveness of quantity demanded to changes in income