Elasticity WS Danns - Assignment Essays

question

Price elasticity is a measure of the relative responsiveness of the change in quantity demanded to a change in price.

answer

True

question

The widespread availability of e-mail has likely decreased the price elasticity of demand for the services of the U.S. Postal Service.

answer

False

question

Jake and Jennifer own a business that provides personal fitness training services. After raising their prices by 10%, the quantity of hours they spend delivering training services fell by 6%. The demand for their services is relatively price inelastic.

answer

True

question

When a 5% increase in price leads to an 8% increase in quantity supplied, supply is relatively inelastic.

answer

False

question

When a 9% increase in price leads to a 6% increase in quantity supplied, supply is relatively inelastic.

answer

True

question

Price elasticity of demand is defined as:

answer

The percentage change in quantity demanded divided by the percentage change in price

question

The price elasticity of demand measures the:

answer

Responsiveness of quantity demanded to a change in price

question

Demand is said to be _______ when the quantity demanded is very responsive to changes in price.

answer

Elastic

question

Demand is said to be _______ when the quantity demanded changes the same proportion as the price.

answer

Unit Elastic

question

When demand is elastic:

answer

-Price elasticity of demand is greater than one.
-Consumers are relatively responsive to changes in price
-The percentage change in quantity demanded resulting from a price change is greater than the percentage change in price.
^all of the above

question

If the curve is perfectly elastic, the elasticity coefficient is _____ and the demand curve is _____.

answer

Infinity, horizontal

question

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded. The demand curve facing this firm is:

answer

elastic

question

Bailey's Barber Shop knows that a 5% increase in the price of their haircuts results in a 15% decrease in the number of haircuts purchased. What is the elasticity of demand facing Bailey's Barber Shop?

answer

3.0

question

Fantastic Cuts Hair Salon knows that a 15% increase in the price of their haircuts will result in a 5% decrease in the number of haircuts sold. What is the elasticity of demand facing Fantastic Cuts?

answer

0.33

question

The Shoe Emporium reduces the price of its shoes by 50% and finds that the quantity demanded for its shoes more than doubles. The demand for shoes from The Shoe Emporium appears to be:

answer

elastic

question

When the Blue Ocean Surfboard Company lowered the price of surfboards by 20%, it sold 10% more surfboards. The price elasticity coefficient for surfboards is:

answer

1/2

question

The nation's largest cable TV company tested the effect of a price reduction for premium movie channels. It lowered prices from $12 to $9.95 and found that the number of customers rose by almost 50%. This means:

answer

the demand for premium movie channels is elastic in this price range.

question

Which of the following is not a major determinant of the price elasticity of demand?

answer

quantity of goods available

question

When demand and income move in the same direction, a good is said to be:

answer

a normal good

question

Exhibit 6-2:
Graph D

answer

The graph that best illustrates a perfectly inelastic demand curve is:

question

Exhibit 6-2:
Graph B

answer

The graph that best illustrates a perfectly elastic demand curve is:

question

Exhibit 6-2:
Graph C

answer

The graph that best illustrates a relatively inelastic (but not perfectly inelastic) demand curve is:

question

Exhibit 6-2:
Graph A

answer

The graph that best illustrates a relatively elastic (but not perfectly elastic) demand curve is:

question

The price of a new electronic toy increases from 16$ to 24$ and the quantity demanded decreases from 1,000 to 900 per month as a result. Based on this information, the price elasticity of demand is estimated to be equal to:

answer

.26

question

The price of a new toy increases from $4 to $6 and the quantity demanded decreases from 10,000 to 6,000 per month as a result. Based on this information, the price elasticity of demand is estimated to be equal to:

answer

1.25, indicating relatively elastic demand

question

The price of stadium seats at a baseball game increases from $20 to $30 and ticket sales fall from 45,000 per game to 35,000 per game. If other things remained constant, then it appears that the price elasticity of demand is:

answer

inelastic

question

A price cut will increase the total revenue a firm receives if the demand for its product is:

answer

elastic

question

A jeweler cut prices in his store by 20% and the dollar value of his sales fell by 20%. This is indicative of:

answer

unit elastic demand

question

Exhibit 6-3
With reference to Graph A, at a price of 10$, total revenue equals:

answer

$400

question

Exhibit 6-3
With reference to Graph A, at a price of 5%, total revenue equals:

answer

$500

question

Exhibit 6-3
Graph A represents a demand curve that is relatively _____. Total revenue _____ as the price decreases from 10$ to 5$.

answer

Elastic; increases

question

Exhibit 6-3
With reference to Graph B, at a price in 5$, total revenue equals:

answer

$200

question

Exhibit 6-3
Graph B represents a demand curve that is relatively ______. Total revenue _____ as the price decreases from 10$ to 5$.

answer

Inelastic; decreases

question

Supply is said to be ______ when the quantity supplied is very responsive to changes in price.

answer

Elastic

question

Elasticity of demand will ____ as he availability of substitutes ____.

answer

-Increase; Increases
-Decrease; decreases
-Both c. and d. are correct answers

question

A 25% decrease in the price of breakfast cereal leads to a 20% increase in the quantity of cereal demanded. As a result:

answer

total revenue will decrease

question

If the supply curve for a product is vertical, then the elasticity of supply is:

answer

equal to zero

question

If the supply curve for a product is horizontal, then the elasticity of supply is:

answer

equal to infinity

question

Good A has an income elasticity equal to 1.0 and a cross price elasticity with respect to Good B of -0.6. then:

answer

Good A is a normal good and Goods A and B complements

question

Good A has an income elasticity equal to 0.4 and a cross price elasticity with respect to Good B of 1.2. Then:

answer

Good A is a normal good and Goods A and B are substitutes.

1 of 40

question

Price elasticity is a measure of the relative responsiveness of the change in quantity demanded to a change in price.

answer

True

question

The widespread availability of e-mail has likely decreased the price elasticity of demand for the services of the U.S. Postal Service.

answer

False

question

answer

True

question

When a 5% increase in price leads to an 8% increase in quantity supplied, supply is relatively inelastic.

answer

False

question

When a 9% increase in price leads to a 6% increase in quantity supplied, supply is relatively inelastic.

answer

True

question

Price elasticity of demand is defined as:

answer

The percentage change in quantity demanded divided by the percentage change in price

question

The price elasticity of demand measures the:

answer

Responsiveness of quantity demanded to a change in price

question

Demand is said to be _______ when the quantity demanded is very responsive to changes in price.

answer

Elastic

question

Demand is said to be _______ when the quantity demanded changes the same proportion as the price.

answer

Unit Elastic

question

When demand is elastic:

answer

question

If the curve is perfectly elastic, the elasticity coefficient is _____ and the demand curve is _____.

answer

Infinity, horizontal

question

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded. The demand curve facing this firm is:

answer

elastic

question

answer

3.0

question

Fantastic Cuts Hair Salon knows that a 15% increase in the price of their haircuts will result in a 5% decrease in the number of haircuts sold. What is the elasticity of demand facing Fantastic Cuts?

answer

0.33

question

The Shoe Emporium reduces the price of its shoes by 50% and finds that the quantity demanded for its shoes more than doubles. The demand for shoes from The Shoe Emporium appears to be:

answer

elastic

question

When the Blue Ocean Surfboard Company lowered the price of surfboards by 20%, it sold 10% more surfboards. The price elasticity coefficient for surfboards is:

answer

1/2

question

answer

the demand for premium movie channels is elastic in this price range.

question

Which of the following is not a major determinant of the price elasticity of demand?

answer

quantity of goods available

question

When demand and income move in the same direction, a good is said to be:

answer

a normal good

question

Exhibit 6-2:
Graph D

answer

The graph that best illustrates a perfectly inelastic demand curve is:

question

Exhibit 6-2:
Graph B

answer

The graph that best illustrates a perfectly elastic demand curve is:

question

Exhibit 6-2:
Graph C

answer

The graph that best illustrates a relatively inelastic (but not perfectly inelastic) demand curve is:

question

Exhibit 6-2:
Graph A

answer

The graph that best illustrates a relatively elastic (but not perfectly elastic) demand curve is:

question

answer

.26

question

answer

1.25, indicating relatively elastic demand

question

answer

inelastic

question

A price cut will increase the total revenue a firm receives if the demand for its product is:

answer

elastic

question

A jeweler cut prices in his store by 20% and the dollar value of his sales fell by 20%. This is indicative of:

answer

unit elastic demand

question

Exhibit 6-3
With reference to Graph A, at a price of 10$, total revenue equals:

answer

$400

question

Exhibit 6-3
With reference to Graph A, at a price of 5%, total revenue equals:

answer

$500

question

Exhibit 6-3
Graph A represents a demand curve that is relatively _____. Total revenue _____ as the price decreases from 10$ to 5$.

answer

Elastic; increases

question

Exhibit 6-3
With reference to Graph B, at a price in 5$, total revenue equals:

answer

$200

question

Exhibit 6-3
Graph B represents a demand curve that is relatively ______. Total revenue _____ as the price decreases from 10$ to 5$.

answer

Inelastic; decreases

question

Supply is said to be ______ when the quantity supplied is very responsive to changes in price.

answer

Elastic

question

Elasticity of demand will ____ as he availability of substitutes ____.

answer

-Increase; Increases
-Decrease; decreases
-Both c. and d. are correct answers

question

A 25% decrease in the price of breakfast cereal leads to a 20% increase in the quantity of cereal demanded. As a result:

answer

total revenue will decrease

question

If the supply curve for a product is vertical, then the elasticity of supply is:

answer

equal to zero

question

If the supply curve for a product is horizontal, then the elasticity of supply is:

answer

equal to infinity

question

Good A has an income elasticity equal to 1.0 and a cross price elasticity with respect to Good B of -0.6. then:

answer

Good A is a normal good and Goods A and B complements

question

Good A has an income elasticity equal to 0.4 and a cross price elasticity with respect to Good B of 1.2. Then:

answer

Good A is a normal good and Goods A and B are substitutes.

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