Econ 226 Chapter 4
When the price of a DVD rental is ______, the price elasticity of demand for DVDs is equal to 1.
$3
Alex's income elasticity of demand for donuts is
-1.00
The cross elasticity of demand for ice cream with respect to the price of chocolate sauce is
-2.0
The best estimate of the price elasticity of demand for Saudi Arabian oil is _______ .
0.62
Alex's income elasticity of demand for bagels is
1
The elasticity of supply when the average price is 20cents¢ a minute is
1
The elasticity of supply when the price falls from 40cents¢ to 30cents¢ a minute is
1
The price elasticity of demand for chocolate sauce is
1.8
The price elasticity of supply of coal is
3.78
When the price rises from $4 to $6, the price elasticity of demand is
5.0
The cross elasticity of demand for water with respect to the price of sugar-sweetened drinks is
8.2
With higher fuel costs, airlines raised their average fare from $1.05 to $1.35 per passenger mile and the number of passenger miles decreased from 2.5 million a day to 1.5 million a day. What is the price elasticity of demand for air travel over this range? Describe the demand for air travel.
Over the price range of $1.05 to $1.35 per passenger mile, the price elasticity of demand is 2.0 Over this price range, the demand for air travel is ______. elastic
Are transit tickets, Uber rides, and gasoline substitutes? Explain your answer.
Transit tickets and gasoline are substitutes. Because the quantity of transit tickets bought decreased when the price of gasoline fell, the cross elasticity of demand is positive.
The estimated price elasticity of demand for coffee is 0.26. When the price of coffee rose from $1.00 a pound to $1.60 a pound in 2014, the percentage change in the quantity of coffee demanded in 2014 was _______ percent.
a decrease of 12
Based upon this news clip, a wedding event is ______ good because the higher incomes ______.
a normal; increased the amount spent on a wedding
We would expect the elasticity of demand for Coke, or Gatorade, or Red Bull, or Hawaiian Punch to _________ the elasticity of demand for sugar-sweetened drinks because _______.
be more elastic than; these drinks are more narrowly defined than sugar-sweetened drinks and have more substitutes
How will Comcast's entry into the online video service market influence the demand for Netflix's service? Comcast's entry will _______.
decrease the demand for Netflix's service
The price of coffee rose significantly in 2014 see (Fig. 1 in the news analysis).With other things remaining the same, it must be the case that the supply of coffee _______.
decreased
The supply of tomatoes ______ and the quantity of tomatoes supplied _______.
decreased as the Florida crop failed; increased as the quantity supplied by Mexico and greenhouses increased
What do you predict happened to total revenue from sugar-sweetened drinks when the tax was imposed on them? Why? Total revenue _______ because the demand for sugar-sweetened drinks is _______.
decreased; elastic
If a price cut _______ total revenue, demand is ______.
does not change; unit elastic
The news article _________ tell us whether the supply of oil is elastic or inelastic because the news clip _______.
does not; contains no data on the quantity of oil supplied
The supply of coal is
elastic
How does the total revenue test work for a rise in price? When demand is _______, a rise in price _______ total revenue.
elastic; decreases
Given your answer to the previous question, explain why Netflix might lower its price. Netflix might lower its price to _________.
eliminate the surplus and decrease the loss in subscribers following Comcast's entry into the online video service market
What do you predict happened to total revenue in 2014? The total revenue test tells us that coffee farmers' revenue in 2014 _______.
increased
The news article says that farmers' revenue shrank as the price of coffee fell. We know from this information that the demand for coffee is _________ because _______.
inelastic; a cut in price reduced farmers' revenue
Gasoline has an ______ supply, so an increase in demand increases the price of a gallon of gasoline by a relatively ______ amount.
inelastic; large
The news clip implies that the demand for pet food and pet care products is income ______. The income elasticity of demand for pet food and pet care products is ______.
inelastic; less than 1 because these items are necessities
With no change in the demand for oil, the demand for Saudi Arabian oil is _______ because _______.
inelastic; the fall in the price of oil decreased total revenue
Coffee isn't just coffee. It comes in different varieties, the main two being Arabica and Robusta. We would expect the elasticity of demand for Arabica to be the elasticity of demand for coffee.
larger than
Economists have estimated the price elasticity of demand for winter tomatoes of 0.8. The demand for Florid winter tomatoes is ______ elastic than the demand for tomatoes in general because ______.
more; Florida winter tomatoes have more substitutes than tomatoes in general
Exotic holidays are a good and local holidays are good.
normal; an inferior
If the income elasticity of demand for wedding events is _______, then a wedding event is more of a _______.
positive and greater than 1; luxury than a necessity
As the price rises from $200 a chip to $300 a chip, total revenue ______. So at a price of $250 a chip, demand is ______.
rises; inelastic
The news clip implicitly refers to _______.
the cross elasticity of demand for public transit rides with respect to the price of gasoline and the cross elasticity of demand for Uber rides with respect to the price of gasoline
Exotic holidays and local holidays are substitutes if ______.
the cross elasticity of demand is positive
The elasticities of demand implicitly referred to in the news clip are ________.
the price elasticity of demand for road trips this year and the price elasticity of demand for Memorial Day road trips by Carolinians. The price elasticity of demand for road trips by Carolinians over the Memorial Day holiday is .13 The price elasticity of demand for road trips by Americans is 3.5
This statement means that all of the following are true except ______.
the quantity of winter tomatoes demanded increased
So at an average price of $350 a chip, demand is _______.
unit elastic
The percentage change in the quantity of bananas demanded is a decrease of 20 percent. The percentage change in your expenditure on bananas _______ by approximately _______.
decreases; 15 percent
Reggie Brown is implying that the demand for Florida winter tomatoes is ______ because as the price of tomatoes falls, total revenue ______.
inelastic; decreases
Gasoline has an ______ demand, so a decrease in supply increases the price of a gallon of gasoline by a relatively ______ amount.
inelastic; large
Given the prices of the two holidays, the income elasticity of demand for exotic holidays is ______ and the income elasticity of demand for local holidays is ______.
positive; negative
