Econ Midterm hw two
Refer to the figure at right. Between points B and C, demand is
elastic, but not infinitely elastic.
Refer to the figure at right. The price elasticity of demand along this demand curve is equal to (straight vertical line)
zero
Which of the following represents the income elasticity of demand?
(change in Q/ change in I) X (I/Q)
What represents the price elasticity of demand?
(change in Q/change in P) X (P/Q)
The cross-price elasticity of demand for peanut butter with respect to the price of jelly is minus−0.3. If we expect the price of jelly to decline by 15%, what is the expected change in the quantity demanded for peanut butter?
+4.5%
Refer to the figure at right. Between two points near D, demand is
Unit elastic
If two goods are substitutes, the cross-price elasticity of demand must be
positive
Elasticity measures:
the percentage change in one variable in response to a one percent increase in another variable.
The income elasticity of demand refers to
the percentage change in quantity demanded resulting from a 1 percent increase in income.
Would you expect the price elasticity of demand for paper towels to be larger in the short run or in the long run? Why?
The price elasticity of demand for paper towels should be larger
For automobile demand in the United States, the income response tends to be larger in the
short run
If a 5% percent increase in the price of corn flakes causes a 10% percent decline in the quantity demanded, what is the elasticity of demand?
-2.00
Refer to the figure at right. If close substitutes are difficult to find in the short run, which of the demand curves in the figure best represents market demand in the short run?
D1
Which of the following statements about the demand curve in the figure at right is true?
Demand becomes more inelastic as price declines
Which of the following best describes the demand curve in the figure at right? (straight line vertical)
Demand is completely inelastic.
Which of the following best describes the demand curve in the figure at right? (straight line across)
Demand is infinitely elastic.
Would you expect the price elasticity of demand for televisions to be larger in the short run or in the long run? Why?
in the short run because televisions are durable
Refer to the figure at right. At point A, demand is
infinitely elastic.
Why do long-run elasticities of demand differ from short-run elasticities?
it may take time for addition substitutes to become available and it may take time for people to change their consumption habits
The cross-price elasticity of demand refers to
the percentage change in the quantity demanded of one good resulting from a 1 percent increase in the price of another good.
Refer to the figure at right. Between points E and F, demand is
inelastic, but not completely inelastic.