question
Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and 1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:
answer
inelastic
question
The more elastic the supply of a product, the more the actual burden of a tax on the product will:
answer
fall on Buyers.
question
Suppose the president of a textbook publisher argues that a 10 percent increase in the price of textbooks will raise total revenue for the publisher. It can be concluded that the company president thinks that demand for textbooks is:
answer
inelastic.
question
If the demand for cigarettes is highly inelastic, this indicates that:
answer
the quantity of cigarettes purchased by consumers is not very responsive to a change in the price of cigarettes.
question
The price elasticity of demand coefficient for a good will be lower:
answer
A and B (if there are few substitutes for the good, and if expenditure on it is a small part of one's budget.)
question
Suppose that the quantity of apples sold increases by 30 percent after the price of pears increases by 15 percent. What is the coefficient of cross elasticity of demand?
answer
2.0
question
A product would be more demand price elastic:
a. the shorter the time the consumer has to adjust to price changes.
b. the lower the price of the good.
c. the fewer the number of good substitutes.
d. the less the essential nature of the good.
e. if the supply is more price elastic.
a. the shorter the time the consumer has to adjust to price changes.
b. the lower the price of the good.
c. the fewer the number of good substitutes.
d. the less the essential nature of the good.
e. if the supply is more price elastic.
answer
the less the essential nature of the good.
question
If the percentage change in the quantity demanded of a good is greater than the percentage change in price, price elasticity of demand is:
answer
elastic.
question
Suppose the president of a college argues that a 25 percent tuition increase will raise revenues for the college. It can be concluded that the president thinks that demand to attend this college is:
answer
inelastic, but not perfectly inelastic.
question
In Exhibit 5-6, the demand curve for concert tickets shown above is classified as:
answer
elastic.
question
Tara buys four music cassettes when the price is $10 and two cassettes when the price is $14. Her price elasticity of demand is:
answer
2
question
Over the elastic portion of a demand curve, a decrease in price causes:
answer
an increase in total revenue.
question
If the income elasticity of demand for a good is .59, then it is what type of good?
answer
Income inelastic.
question
Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption by 10 percent. If the price elasticity of demand for water is 0.25, by how much would you have to raise the price of water?
answer
40 percent
question
Suppose that when price is $10, quantity supplied is 20. When price is $6, quantity supplied is 12. The price elasticity of supply is:
answer
1.0
question
If a decrease in the price of football tickets increases the total revenue of the athletic department, this is evidence that demand is:
answer
price elastic.
question
The short-run price elasticity of demand for airline travel is .05, while the long-run elasticity is 2.36. This means that a significant increase in airline ticket prices will cause airline companies to:
answer
collect less revenue from travelers who book well in advance.
question
If New York City expects that an increase in bus fares will raise mass transit revenues, it must think that the demand for bus travel is:
answer
inelastic.
question
If a good has a price elasticity of demand coefficient greater than 1, total revenue can be increased by raising the price. - T/F
answer
False
question
Applying supply and demand analysis, other factors held constant, the steeper the supply curve (more elastic), the larger the burden of a sales tax that is borne by the sellers. - T/F
answer
True
question
Suppose that a jewelry store found that when it increased prices by 10 percent, sales revenue increased by 3 percent. Which of the following is true about the price elasticity of demand for the store's goods?
answer
Demand is inelastic, but not perfectly.
question
As shown in Exhibit 5-9, assuming goods X and Y are substitutes, an increase in the price of Y, other factors held constant, could move the equilibrium from point E to point:
answer
C.
question
According to Exhibit 5-7, the demand for concert tickets is:
answer
inelastic.
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