microeconomics Quiz 3
when the price of a movie ticket increases from $5 to $7, the quantity of tickets demanded decreases from 600 to 400 a day. What is the price elasticity of demand for movie tickets
1.20
A fall in the price of cabbage from $10.50 to $9.50 per bushel increases the quantity demanded from 18,800 to 21,200 bushels. The price elasticity of demand is
1.20.
The figure represents the behavior of total revenue as price falls along a straightminus−line demand curve. What is the price elasticity of demand if total revenue is given by point f?
Demand is elastic.
If demand is price elastic,
a 1 percent decrease in the price leads to an increase in the quantity demanded that exceeds 1 percent.
The demand for movies is unit elastic if
a 5 percent increase in the price leads to a 5 percent decrease in the quantity demanded.
To maximize its revenue,
a firm facing inelastic demand should always raise its price.
In order to have an effect, a price ceiling must be set ________.
below the equilibrium price
Dan sells newspapers. Dan says that a 4 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 8 percent. According to Dan, the demand for newspapers is ________.
elastic
A hot dog vendor on a street corner could increase the quantity of hot dogs her customers demand by 12 percent if she lowers the price of a hot dog 10 percent. The demand for the hot dogs is
elastic.
According to the total revenue test, a price cut increases total revenue if demand is
elastic.
Goods and services that can be produced by using commonly available resources that could be allocated to a wide variety of alternative tasks have a supply that is
elastic.
If a good is produced using inputs for which there are no substitutes, the good's
elasticity of supply is likely to be small.
An minimum wage set above the equilibrium wage rate is a price
floor that results in a surplus of lowminus−skilled labor.
Suppose a rise in the price of peaches from $5.50 to $6.50 per bushel decreases the quantity demanded from 12,500 to 11,500 bushels. The price elasticity of demand is
. 0.5.
An increase in Abigail's income decreases her demand for used cars. For her, used cars are.
. an inferior good.
Demand is elastic when a price ________ results in total revenue ________.
. rise, decreasing
The elasticity of supply equals ________ if the supply curve is vertical.
0
Suppose the quantity of gasoline is measured in gallons and the price of gasoline is measured in dollars. The price elasticity of demand is 0.67. If the price of gasoline was now measured in cents rather than dollars, the price elasticity of demand would now be
0.67
If a 6 percent decrease in the price leads to a 5 percent increase in the quantity demanded, the price elasticity of demand is
0.83.
The figure shows the demand curve for popsicles. The price elasticity of demand when the price of a popsicle increases from $0.30 to $0.50 is ________.
1
Taco Bell's economists determine that the price elasticity of demand for their tacos is 2.0. So, if Taco Bell raises the price of its tacos by 6.0 percent, the quantity demanded will decrease by ________ percent.
12.0
The figure shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, how many apartment units are rented?
2,000
The figure shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $4 per hour, how many hours do students work?
9,000 hours
A price ceiling is a price
A. above which a seller cannot legally sell.
A rent ceiling results in a shortage. As a result, which of the following do you expect?
All of the above would be expected.
The price elasticity of demand for purses is measured in what units?
The price elasticity of demand is a unitless measure
In the figure, a minimum wage of ________ would result in employment of ________.
W1; L2
A minimum wage set above the equilibrium wage will
create a surplus of labor.
Toothpaste and toothbrushes are complements, so the ________ elasticity of demand is ________.
cross; negative
In the figure, originally the apartment rental market is in short−run and long−run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month, which causes a shortage. Suppose that apartments are an inferior good and incomes rise. The increase in income
decreases the shortage.
When the minimum wage is set above the equilibrium wage rate, the number of hours of labor employed is determined by the ________ and the ________.
demand for labor; minimum wage
If the longminus−run supply of rice is perfectly elastic, then
in the long run, an increase in the demand for rice leaves the price of rice unchanged.
If demand is inelastic, an increase in the price will
increase total revenue.
A rent ceiling below the equilibrium rent will create
increased search time and black markets.
In the figure, originally the apartment rental market is in shortminus−run and longminus−run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month, which causes a shortage. Suppose that apartments are a normal good and incomes rise. The increase in income
increases the shortage.
If the price elasticity is between 0 and 1, demand is
inelastic.
If the quantity demanded changes by a relatively small amount for a given change in price, then demand is
inelastic.
A minimum wage ________.
is a price floor in the labor market
A supply curve that is horizontal reflects a supply that
is elastic.
The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of
its substitutes and its complements.
The supply of lettuce in the short run will be ________ than the supply in the long run and ________ than the supply today.
less elastic; more elastic
A price ceiling ________.
makes it illegal to charge a higher price than specified
An example of a price floor is a
minimum wage.
The price elasticity of demand is defined as the magnitude of the
percentage change in quantity demanded divided by the percentage change in price.
The price elasticity of demand is equal to the ________ in the ________ divided by the ________ in the ________.
percentage change; quantity demanded; percentage change; price
If the supply curve is vertical then supply is
perfectly inelastic.
The figure represents the behavior of total revenue as price falls along a straightminus−line demand curve. Unit elasticity of demand occurs at
point h.
Blue pens and black pens are close substitutes. The cross elasticity of demand for black pens with respect to the price of blue pens is ________.
positive
Suppose the price of burgers increases from $2 to $3 each. The degree to which quantity demanded responds to this price increase depends on the
price elasticity of demand.
The price elasticity of demand for oil is estimated at 0.05. This value means a 10 percent increase in the
price of oil will decrease the quantity of oil demanded by 0.5 percent.
Suppose the equilibrium wage is $10 per hour. A minimum wage is a ________ and affects employment if it is set at ________.
price floor; $12 per hour
An important determinant of the price elasticity of supply is the extent to which
production requires the use of particularly scarce or specialized resources.
The cross elasticity of demand is calculated as the percentage change in the
quantity demanded of one good divided by the percentage change in the price of another good
If the supply for a good is elastic, that means that when price increases the
quantity supplied will increase by a greater percentage than the price increased.
Unit elastic demand means that the
ratio of a percentage change in the quantity demanded to a percentage change in the price equals 1.
A price floor
results in a surplus if the floor price is greater than the equilibrium price
A rent ceiling ________.
set above equilibrium price has no effect
A normal good is defined as a good for which the demand curve
shifts rightward as income increases.
the elasticity of supply does NOT depend on
the fraction of income spent of the product
When the demand for a good is perfectly elastic, ________.
the price elasticity of demand is infinite
The price elasticity of demand measures
the responsiveness of the quantity demanded to changes in price.
An important determinant of the price elasticity of supply is
the time period firms have to adjust to a new price.
When a minimum wage is set above the equilibrium wage rate, ________.
unemployment increases
If an increase in price results in no change in total revenue, then demand must be
unit elastic.
If a minimum wage is set above the equilibrium wage rate, employment
will decrease.
The price elasticity of demand for oranges ________ change if the units of the quantity was changed from pounds to kilograms and ________ change if the units of the price was changed from dollars to cents.
would not; would not
The price elasticity of demand can range between
zero and infinity.
A good with a vertical demand curve has a demand with
zero elasticity.
the demand curve in the figure above illustrates the demand for a product with
zero price elasticity of demand at all prices
In the figure, if the minimum wage is equal to ________, there would be ________ hours of labor employed.
$8 per hour; 2,000
The figure illustrates the demand for hamburgers. When the price is $1.00 a hamburger, the elasticity of demand is ________ and a 1 percent increase in the price will ________ the quantity of hamburgers demanded by ________ percent.
0.40; decrease; 0.40
Bus rides and canned soup are inferior goods, so the ________ elasticity of demand is ________.
income; negative
If the demand for a good is perfectly elastic, the price elasticity of demand is ________ and the demand curve is ________.
infinite; horizontal
Demand is price inelastic if a relatively ________ price increase leads to a relatively ________ in the quantity demanded.
large; small decrease
The cross elasticity of demand between Coca−Cola and Pepsi−Cola is ________ so that Coke and Pepsi are ________.
positive; substitutes
