econ quiz 4

The price elasticity of demand coefficient measures:

A. buyer responsiveness to price changes

If the price of calculators falls from $11 to $10 and, as a result, the quantity demanded increases from 100 to 125, then:

A. demand is elastic

A manufacturer of frozen pizza....

A. the demand for pizza is elastic above $5 and inelastic below $5

If a firm could sell 3,000 units of product A at $10 per unit and 5,000 at $5, then:

B. Demand is inelastic in this price range

Refer to the attached table. The price elasticity of demand is unit elastic:

B. In the $4-$3 price range only

If the demand for product X is inelastic, a 4 percent increase in the price of X will:

B. decrease the quantity of X demanded by less than 4 percent

Income elasticity of demand measures how sensitive purchases of a specific product are to change in:

C. Income

We would expect the cross elasticity of demand between gatorade and powerade to be:

C. Positive, indicating substitute goods

The Illinois Central Railroad.....

C. the railroad felt that the demand for passenger service was inelastic and opponents of the rate increase felt it was elastic

Rutgers University raises tuition....

D. Relatively Inelastic