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Exam 5: Elasticities of Demand and Supply

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Question 151

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To determine the price elasticity of demand, we

A) need information on consumers' incomes.
B) need to know how much is available.
C) compare the percentage change in the quantity demanded to the percentage change in the price.
D) compare the change in the quantity to the change in price.
E) divide the quantity by the price.

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Question 152

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"The fewer the number of substitutes for a product, the more elastic the demand for that product." Is the previous statement true or false?

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The statement is false. The greater the ...

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Question 153

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The figure above shows the demand curve for Starbucks latte. -Using the figure above, suppose Starbucks charges $4.50 per cup for its latte. Which of the following is true? I. At this price, the demand for Starbucks latte is elastic. Ii. If Starbucks lowers the price of its latte, its revenue will decrease. Iii. If Starbucks raises the price of its latte, the demand for it will become less elastic.

Which of the following statements is correct?

If a 20 percent increase in the price of a good does not change the quantity supplied, the

If a lower price for good X increases the demand for good Y, the cross elasticity value for the two goods is

The price elasticity of demand is always positive, as is the price elasticity of supply. Is the cross elasticity of demand always positive? Explain your answer.

When hamburger is $3 per pound, Ms. Rush buys 6 pounds. When hamburger is $2 per pound, Ms. Rush buys 10 pounds. Describe Ms. Rush's demand between these two prices.

When the price of Cosmopolitan magazine decreases from $5 to $3, the quantity demanded increases from 600,000 to 1,000,000 copies each month. Using the midpoint method, the price elasticity of demand equals

Goods are ________ when the income elasticity of demand is less than zero.

An inferior good has a ________ elasticity of demand.

$\begin{array} { c c } \begin{array} { c } \text { Price } \\\text { (dollars per pizza) }\end{array} & \begin{array} { c } \text { Quantity demanded } \\\text { (pizzas per day) }\end{array} \\\hline 10 & 100 \\9 & 125 \\\hline\end{array}$ -The data in the table above give two points on the demand curve for pizza. Using the midpoint method, when the price of a pizza falls from $10 to $9, what is the percentage change in the quantity demanded?

When the percentage change in the quantity supplied is less than the percentage change in price, the supply is

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded, the price elasticity of demand equals

If a 2 percent change in price leads to a ________ percent change in the quantity demanded, then demand is ________.

During last year the price of regular unleaded gasoline in Oakland, California increased 11.0 percent. If the price elasticity of demand for gasoline was 0.13, the price hike means that the quantity demanded decreased by

If the percentage change in quantity demanded is greater than the percentage change in price, can you determine if the demand is elastic, unit elastic, or inelastic? Explain your answer.

A ________ curve means that ________.

Consider two goods: peanut butter and jelly. If the price of jelly increases from $2 a jar to $3 per jar and the quantity demanded of peanut butter decreases from 50 jars to 45 jars, what is the cross elasticity of demand? Are the goods substitutes or complements?

What are the three cases for the price elasticity of demand? Briefly define each.