ECON1 (set 5)

The quantity of parking permits demanded drops from 12,774 down to 7,265; use the midpoint formula to calculate the percentage change in quantity.

-55 percent

Why may you want to raise your prices when you discover that demand for your product is inelastic?

it will increase your revenue

If the price of windmills rises by 20%, and the quantity supplied rises by 2%, what is the price elasticity of supply of windmills?

0.1

If the average income in the United States rises by 10%, housing expenditures by homeowners will increase by 5%. Based on this information, what is the income elasticity of demand for housing?

0.5

If the average income in the United States rises by 5%, then housing expenditures by homeowners increase by 3%. Based on this information, what is the income elasticity of demand for housing?

0.6

Calculate the absolute value of the price elasticity of demand if the percentage change in price is 67% and the percentage change in quantity is −55%.

0.8

If increasing the price of eggs by 10% leads to a decrease in the quantity demanded by 10%, what is the absolute value of the price elasticity of demand for eggs?

1

When the government increased the minimum wage by 50%, it led to a 75% increase in workers providing labor. Based on the information given, what is the price elasticity of supply for labor?

1.50

On weeknights an Uber driver can expect to earn $110 driving a six-hour shift. Surge pricing on Saturday nights mean that Uber drivers can expect to earn $140 driving a six-hour shift. On weeknights, there are 200 drivers on the road, which rises to 300 on Saturdays.

1.67

When the price elasticity of demand or supply is _____, it means that the quantity demanded or supplied will be really responsive to changes in price.

elastic

Quantity supplied is _____ to price changes when supply is inelastic.

fairly unresponsive

More competing products mean:

greater elasticity

If the price of eggs were to fall by 25%, and if the price elasticity of demand for eggs is around −0.2, will the quantity demanded for eggs increase or decrease, and by what percent?

increase by 5

The cross-price elasticity of demand measures all of the following EXCEPT:

the ratio of the percent change in the price of another good to the percent change in quantity demanded.

_____ is the total amount you receive from buyers, which is calculated as price times quantity.

total revenue

If increasing the price of tables by 10% leads to a decrease in the quantity demanded by 20%, what is the absolute value of the price elasticity of demand for tables?

2

If the quantity changed from Q1 to Q2, using the midpoint formula, what is the percentage change in quantity?

= ((Q2 − Q1) ÷ (Q2 + Q1)/2) × 100

E-books are highly price-elastic. For every 1 copy of an e-book sold at $16.00, 1.75 copies would have been purchased if the price had been $10.00. If customers would buy 10,000 copies of a particular e-book when priced at $16.00, which price point produces lower revenue?

The $16.00 price point yields $15,000 less in revenue than at $10.00.

The price elasticity of supply is typically _____ when you're looking over a longer time horizon.

larger

Economists use a special method called the _____, which measures the percent change between any two points relative to the point _____ those two points.

midpoint formula; midway between

We measure the income elasticity of demand as the ratio of the percent change in _____ to the percent change in _____.

quantity demanded; income

When prices _____, new businesses may enter the market. When prices _____ some businesses may exit.

rise fall