Econ Quiz 2 Questions

At a price of 1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of 1.40, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about..?

2.60

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

A 13.33 percent increase in the price of the good

Knowing the price elasticity of demand is important in business because?

It allows a manager to determine whether a price increase will cause total revenue to rise or fall

It is most likely for _____ to have an income elasticity less than 1, and ______ to have and income elasticity of more than one. a. Coffee; boats b. boats;cars c. vacations; cell phones d. filet mignon; chicken

a. coffee; boats

A linear demand curve

has a constant slope, but changing elasticity

if the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

one year after the price increase

For a good that is a necessity, demand ...

tends to be inelastic

In general, the more elastic a demand curve is

the flatter it will be

the longer people have to adjust to a price change:

the more elastic their demand will be