LaunchPad Chapter 5: Elasticity
A grocery store announced a 50% decrease in the price of local honey. Sales increased by 200%. Based on the information, the price elasticity of honey is:
4
If the price elasticity of demand is 10, then for every 1% increase in price, there is a:
10% decrease in quantity demanded
Suppose that the quantity demanded for a product falls by 9% as people's incomes fall by 3%. What is the income elasticity for this good?
3.00
A firm increases its price for a good and total revenues increase. From this, we can conclude that its demand:
is price inelastic
If hot dogs and relish are complements, their cross elasticity of demand is:
less than 0
Which of these is NOT a determinant of elasticity?
sales tax rate placed on an item
Which of the following is a possible measurement of inelastic demand?
0.7
If the price of a product falls by 15% and the quantity supplied falls by 25%, the elasticity of supply is:
1.67
Walmart is thinking about offering a 25% discount on a brand of shoes. If the elasticity of demand is two, then the discount would increase sales by:
50%
Which of these would result in a higher price elasticity?
a longer period of time
If a product's price rises by 6% and its quantity demanded falls by 8%, then we can say that demand for this product is:
elastic
Products with many close substitutes tend to have _____ demand, and products considered to be luxury goods tend to have _____ demand.
elastic; elastic
The greater the percentage of the budget spent on a good, the:
higher the elasticity of demand is
If the cross elasticity of demand between fly rods and reels is -0.8, a decrease in the price of rods would _____ sales of reels because the two goods are _____.
increase; complements
Assume a good is considered elastic. If the price of the good decreases, then total revenue:
increases
Suppose your income falls from $35,000 to $33,000 and that your quantity demanded of a good increases from 40 units to 55 units. The good is said to be a(n):
inferior good
In general, the flatter the supply curve is, the:
more elastic is supply
If soda and potato chips are complements, then their cross elasticity of demand is:
negative
A vertical demand curve represents demand that is:
perfectly inelastic
Knowing a product's price elasticity of demand allows economists to:
predict the amount by which quantity demanded will change in response to a change in price