question
If you compute the price elasticity of demand using a quantity of tickets from 1 to 8 and using a quantity of tickets from 1,000 to 8,000, the value of the price elasticity of demand is
answer
the same because the percentage change in quantity demanded will remain the same. Correct
question
If a university passed a rule stating that university students must live in university dormitories, what effect would this have on the price elasticity of demand for dorm space? How might this rule affect room rates?
answer
The price elasticity of demand would be more inelastic, and room rates would increase.
question
Movies+ 3.4
Dental services+ 1.0
Clothing+ 0.5
The values indicate that:
Dental services+ 1.0
Clothing+ 0.5
The values indicate that:
answer
a 1% increase in income will increase the quantity of movies demanded by 3.4%
question
A negative income-elasticity coefficient means that
answer
the good is inferior such that if income falls, the quantity demanded of the good will rise.
question
Research has found that an increase in the price of beer would reduce the amount of marijuana consumed. This research indicates that the cross elasticity of the two products is
answer
negative, and beer and marijuana are complements.
question
The purpose of charging different prices to different groups of customers is to
answer
increase revenue and in turn profits. Lower afternoon movie prices are an example of this type of pricing. Correct
question
Suppose that the total revenue received by a company selling basketballs is $600 when the price is set at $30 per basketball and $600 when the price is set at $20 per basketball. Without using the midpoint formula, identify whether demand is elastic, inelastic, or unit-elastic over this price range.
Demand is
Demand is
answer
unit-elastic
question
What are the major determinants of price elasticity of demand?
answer
- time
- substitutability
- proportion of income
- luxury vs necessity
- substitutability
- proportion of income
- luxury vs necessity
question
Use those determinants and your own reasoning in judging whether demand for each of the following products is probably elastic or inelastic:
answer
Bottled water: Elastic
Toothpaste: Inelastic
Crest toothpaste: Elastic
Ketchup: Inelastic
Diamond bracelets: Elastic
Microsoft's Windows operating system: Inelastic
Toothpaste: Inelastic
Crest toothpaste: Elastic
Ketchup: Inelastic
Diamond bracelets: Elastic
Microsoft's Windows operating system: Inelastic
question
Price and total revenue move in the opposite direction when demand is
answer
elastic
question
How would the following changes in price affect total revenue? That is, would total revenue increase, decrease, or remain unchanged?
answer
a. Price falls and demand is inelastic: Decrease
b. Price rises and demand is elastic: Decrease
c. Price rises and supply is elastic: Increase
d. Price rises and supply is inelastic: Increase
e. Price rises and demand is inelastic: Increase
f. Price falls and demand is elastic: Increase
g. Price falls and demand is of unit elasticity: Remain unchanged
b. Price rises and demand is elastic: Decrease
c. Price rises and supply is elastic: Increase
d. Price rises and supply is inelastic: Increase
e. Price rises and demand is inelastic: Increase
f. Price falls and demand is elastic: Increase
g. Price falls and demand is of unit elasticity: Remain unchanged
question
Suppose the cross elasticity of demand for products A and B is + 3.6 and for products C and D is -5.4.
What can you conclude about how products A and B are related?What can you conclude about products C and D?
What can you conclude about how products A and B are related?What can you conclude about products C and D?
answer
A and B are substitutes.
C and D are complements. Correct
C and D are complements. Correct
question
Danny "Dimes" Donahue is a neighborhood's 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $1.50 each, he sells 100. At a price of $1 each, he sells 300.
a. Is demand elastic or inelastic over this price range?
b. If demand had the same elasticity for a price decline from $1.00 to $0.50 as it does for the decline from $1.50 to $1, would cutting the price from $1.00 to $0.50 increase or decrease Danny's total revenue?
a. Is demand elastic or inelastic over this price range?
b. If demand had the same elasticity for a price decline from $1.00 to $0.50 as it does for the decline from $1.50 to $1, would cutting the price from $1.00 to $0.50 increase or decrease Danny's total revenue?
answer
a. elastic
b. increase
b. increase
question
a. What is the formula for measuring the price elasticity of supply?
c. Is its supply elastic, or is it inelastic?
c. Is its supply elastic, or is it inelastic?
answer
a. Percentage change in quantity supplied/percentage change in price
c. elastic
c. elastic
question
Suppose the price of movie tickets changes. The price change leads to a 20 percent increase in the quantity demanded of movie tickets. This causes the total revenue from movie tickets to increase by 10 percent.
Is the demand for movie tickets elastic, inelastic, or unit-elastic?
Is the demand for movie tickets elastic, inelastic, or unit-elastic?
answer
elastic
question
Suppose the price of movie tickets changes. The price change leads to a 20 percent increase in the quantity demanded of movie tickets. This causes the total revenue from movie tickets to decrease by 10 percent.
Is the demand for movie tickets elastic, inelastic, or unit-elastic?
Is the demand for movie tickets elastic, inelastic, or unit-elastic?
answer
inelastic
question
Gus buys cupcakes every Saturday morning. When he walks into the bakery, he always orders by saying, "Give me 10 cupcakes." What does this tell you about Gus's elasticity of demand for cupcakes?
a. Gus's demand for cupcakes is
a. Gus's demand for cupcakes is
answer
a. perfectly inelastic
question
Gus buys cupcakes every Saturday morning. When he walks into the bakery, he always orders by saying, "Give me $10 worth of cupcakes." What does this tell you about Gus's elasticity of demand for cupcakes?
Gus's demand for cupcakes is
Gus's demand for cupcakes is
answer
unit elastic
question
A company doing marketing research finds that a 10 percent increase in its product's price would create a 5 percent decrease in the quantity demanded of its product.
a. Based on this information, demand for the company's product is
b. Using this same information, the company should ________ the price of its product.
a. Based on this information, demand for the company's product is
b. Using this same information, the company should ________ the price of its product.
answer
a. inelastic
b. raise
b. raise
question
A company doing marketing research finds that a 10 percent increase in its product's price would create a 2 percent decrease in the quantity demanded of its product.
a. Based on this information, demand for the company's product is
a. Based on this information, demand for the company's product is
answer
a. inelastic
b. raise
b. raise
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
