question
If the percentage change in the quantity demanded of a good is less than the percentage change in price, price elasticity of demand is
answer
Inelastic
question
A perfectly elastic demand curve has n elasticity coefficient of
answer
Infinity
question
If a decrease in the price of movie tickets increases the total revenue of movie theaters, this is evidence that demand is
answer
Price elastic
question
Suppose the president of a college argues that a 25% tuition increase will raise revenues for the college. It can be concluded that the president thinks that demand to attend college is
answer
Inelastic, but not perfectly inelastic
question
The president of Tucker Motors says, "Lowering the price won't sell a single additional Tucker car." The president believes that the price elasticity of demand is
answer
Perfectly inelastic
question
If Tucker University increases tuition to increase it revenue, it will
answer
Be successful if demand is inelastic
question
In Exhibit 12, if the area øABC equals the area øDEF, the demand curve is
answer
Unitary elastic
question
In Exhibit 12, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is
answer
Elastic
question
If the price elasticity of demand is elastic, then
answer
There are a large number of substitute products available
question
If the quantity of bread demanded rises 2% when the price of bread declines 10%, then the price elasticity of demand is
answer
0.2
question
Suppose Sally buys exactly five bars of English toffee each week, regardless of whether the toffee bars are regularly priced at $1 or on sale for $.50. Based on this information, what is Sally's price elasticity of demand for English toffee in this price range?
answer
0
question
Suppose Bill budgets exactly $50 each month for fresh shrimp regardless of whether shrimp is priced at $10 per pound, or is on sale for $4 per pound. Based on this information, Bill's price elasticity of demand is
answer
1
question
What is the price elasticity of demand for a vertical demand curve?
answer
Perfectly inelastic
question
A perfectly price-elastic demand is consistent with which of the following?
A.) A horizontal demand curve
b.) Few close substitutes
c.) Inferior goods
d.) A low cross-price elasticity of demand
A.) A horizontal demand curve
b.) Few close substitutes
c.) Inferior goods
d.) A low cross-price elasticity of demand
answer
A.) A horizontal demand curve
question
As shown in Exhibit 11, the price elasticity of demand for good X between points E and B is
answer
3/7= 0.43
question
Which of the following is true about the price elasticity of demand on the top part of a linear demand curve?
a.) demand is inelastic
b.) demand is unitary elastic
c.) it is impossible to tell
d.) demand is elastic
a.) demand is inelastic
b.) demand is unitary elastic
c.) it is impossible to tell
d.) demand is elastic
answer
D.) demand is elastic
question
Along a segment of the demand curve where the price elasticity of demand is less than 1, a decrease in price
answer
Will decrease total revenue
question
If a straight-line demand curve slopes down, price elasticity will
answer
Change between points along the demand curve
question
Price elasticity of demand tends to be larger in the long run than in the short run. Which of the following is a reason that this statement is true?
answer
If price rises, over time, consumers have more opportunities to find suitable substitutes
question
Demand for any product will become more inelastic
answer
The fewer the number of substitutes available
question
If bus travel is an inferior good, its income elasticity of demand will be
answer
Negative
question
If a good is inferior in an economic sense,
answer
income elasticity of demand is negative
question
If automobiles and gasoline are complements, then their cross-elasticity coefficient will be
answer
Negative
question
Suppose that when price is $10, quantity supplied is 20 units, and when the price is $6, the quantity supplied is 12 units. What is the price elasticity of supply?
answer
1.0
question
Using supply and demand analysis, which of the following is true, the more elastic the demand curve
answer
The smaller the portion of a sales tax that is passed on to the consumer
question
Using supply and demand analysis, which of the following is true, the more inelastic the demand curve
answer
The larger the portion of the sales tax that is passed on to the consumer.
question
Suppose that Starbucks reduces the price of its premium coffee from $2.20 to $1.80 per cup, and as a result, the quantity sold per day increased from 350 to 450. Over this price range, the absolute value of the price elasticity of demand for Starbucks coffee is
Select one:
a. 0.40.
b. 0.80.
c. 1.25.
d. 2.50.
Select one:
a. 0.40.
b. 0.80.
c. 1.25.
d. 2.50.
answer
C. 1.25
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