Microeconomics Chapter 19

If a firm increases the price of their product in the elastic portion of the demand​ curve, total revenues will
A.
stay the same.
B.
increase.
C.
decrease
D.
first increase and then decrease.

Suppose that the cross price elasticity of demand between ski lift tickets and ski rentals is −0.20.

What would you expect to happen to the sales of ski rentals if the price of ski lift tickets rises by 15​percent?

The demand for ski rentalsski rentals would
___________
.
The demand for ski rentalsski rentals would fall by
___________percent.

We should expect the cross price elasticity of butter and margarine to be
A.
positive since they are substitutes.
B.
positive since they are complements.
C.
negative since they are complements.
D.
negative since they are substitutes.

What does the price elasticity of demand​ measure?
A.
The amount that the demand curve shifts when there is a change in the price of the good.
B.
How long it takes consumers to react when there is a change in the price of a good.
C.
The change in quantity demanded when there is a​ 1% change in income.
D.
The responsiveness of quantity demanded to a change in the price of a good.

A Chinese restaurant finds that when it prices the dinner buffet at ​$10​, the restaurant sells 150 per day. When the price is reduced to ​$9​, the restaurant sells 200 per day. Based on this​ information, use the​ average-values formula to find the price elasticity of demand for the dinner buffet. Provide the absolute value of the price elasticity of demand.

A.
2.71
.B.
3.33
C.
0.37
D.
0.30

Joes Campus Grill priced its hamburgersat ​$2.00, they sold 200 per week. When the price was ​$3.00​, they sold 150 per week. Based on this​ information, the absolute value of the price elasticity of demand for hamburgers is
A.
0.71
B.
2.00
C.
1.41
D.
0.50

Based on the above​ calculation, demand for hamburgershamburgers is considered to be
____________________
.

All of the following determine the price elasticity of demand except
A.
the length of the time period.
B.
a change in the price of resources used to produce the good.
C.
the existence of close substitutes.
D.
the proportion of a​ person's budget spent on the good.

Income elasticity of demand
A.
measures the responsiveness of quantity demanded to a change in income and refers to the movement along the demand curve.
B.
measures the responsiveness of quantity demanded to a change in income and refers to the vertical shift of the demand curve.
C.
measures the responsiveness of price to a change in income.
D.
measures the responsiveness of quantity demanded to a change in income and refers to the horizontal shift of the demand curve.

When personal income in the country​ rises, so do alcohol consumption and traffic fatalities. It can be said that
A.
alcohol is an inferior good and has a positive income elasticity of demand.
B.
alcohol is a normal good and has a positive income elasticity of demand.
.C.
alcohol is a normal good and has a unit price elasticity of demand.
D.
None of the above.

Total revenues are maximized
A.
on the​ downward-sloping portion of the demand curve.
B.
in the elastic range of the demand curve.
C.
at the point of​ unit-elasticity on the demand curve.
D.
in the inelastic range of the demand curve.

The absolute value of the​ short-run elasticity of demand for bread has been estimated to be 0.15. Its​ long-run elasticity of demand is
A.
0.15.
B.
uncertain without more information.
C.
more than 0.15.
D.
less than 0.15.

A firm sells 8 million units of a good when price is ​$10.00 and 5.5 million units when price is ​$15.00 The price elasticity of demand is
A.
perfectly inelastic.
B.
unitary elastic.
C.
elastic.
D.
inelastic.

If one wanted to know the impact of the falling price of using the Internet on the demand for library​ services, one would need to compute the
A.
income elasticity of demand for the Internet.
B.
cross price elasticity of demand for library services and price of using the Internet.
C.
price elasticity of demand for library services.
D.
price elasticity of supply for the Internet.

Price elasticity of demand is defined as
A.
quantity demanded divided by the change in price.
B.
quantity demanded divided by price.
C.
the change in quantity demanded divided by the change in price.
D.
the percentage change in quantity demanded divided by the percentage change in price.

One would expect that the cross price elasticity of ski poles and skis would be
A.
positive since they are complements.
B.
negative since they are complements.
C.
positive since they are substitutes.
D.
negative since they are substitutes.

Remembering that the price elasticity of demand is evaluated in terms of absolute​ values, which of the following is an example of an elastic​ demand?
A.
​-1.5
B.
0
C.
1.5
D.
.87

We observe a 12 percent decrease in units purchased and​ a(n) 5 percent increase in price. The price elasticity of demand in terms of absolute values is
A.
0.4
B.
2.4
C.
−2.4
D.
1.0

Which of the following would have the most elastic​ demand?
A.
​Coca-Cola.
B.
Cigarettes.
C.
Electricity.
D.
Salt.

A firm changes the price of its product and its sales revenues​ don't change. The absolute value of the price elasticity of demand for its product must be
A.
0.
B.
between 1 and infinity.
C.
1.0.
D.
infinity.

The price elasticity of demand for a particular commodity depends upon all of the following except
A.
the percentage of a​ consumer's total budget devoted to purchasing that commodity.
B.
the length of time allowed for price changes of that commodity.
C.
the number of close substitutes for that commodity.
D.
availability of complementary goods.

The income elasticity of a normal good is
A.
greater than one.
B.
positive.
C.
equal to 0.
D.
negative.

When income is ​$100 per​ week, 10 gallons of gas are demanded. When income is ​$140 per​ week, 1515 gallons of gas are demanded. The income elasticity of demand for gallons of gas ​equals:
A.
0.83
B.
8.00
C.
0.13
D.
1.21