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Liberty University ECON 213 quiz 7 complete Answers | Rated A+
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Liberty University ECON 213 quiz 7 complete Answers | Rated A+

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Question 1

The local bakery calculates the price elasticity of demand for its cinnamon rolls to be –1.25. This tells them that demand is ________ and price is ________ to the buyer.

Question 2

The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________.

Question 3

Used car dealers find that their sales rise in a recession. We can be certain that consumers view used cars as:

Question 4

Price elasticity of demand measures the change in:

Question 5

Henry raised his quantity demanded of hockey pucks from 100 to 150 when the price fell from $5 to

$3 per puck. Using the midpoint method, his price elasticity of demand is:

Question 6

When the price elasticity of demand is elastic, a consumer is:

Question 7

If the income elasticity of demand for good smartphone apps is 5 and the percentage change in income is 10%, what is the percentage change in the quantity consumed?

Question 8

The local National Hockey League (NHL) team decides to lower its ticket prices in order to attract more fans. They are hoping that the:

Question 9

Refer to the following graphs to answer the questions that follow:

Graph ________ most likely shows the price elasticity of demand for the following situation: Bob’s Boots can sell out its entire stock of shoe polish at $2.50 but can sell none if it raises the price to $2.55.

Question 10

If the income elasticity of demand is 1.2, the good will be a(n):

Question 11

Firms supplying twistyties decrease the quantity supplied of inputs by 10% when the price decreases by 5%. The price elasticity of supply for twistyties is:

Question 12

If the percentage change in the quantity consumed of pizza is 8% and the percentage change in income is 2%, what is the income elasticity of demand for pizza?

Question 13

What good is most likely to have an income elasticity of demand equal to 8?

Question 14

Consider two labor markets. In the first, the elasticity of supply is relatively elastic, while it is relatively inelastic in the latter. Imposing a minimum wage in each market would result in ________ unemployment in the first market and ________ unemployment in the second.

Question 15

If the crossprice elasticity between Good A and Good B is –1.5 and the percentage change in quantity demanded of Good B is 15%, what is the percentage change in the price of Good A?

Question 16

If the price elasticity of supply is 2.5, we know that it is:

Question 17

The price elasticity supply of doctors could be considered ________ because it takes a minimum of four to six years of training to be able to work as a physician.

Question 18

Robert’s Furniture produces highquality wooden bedroom sets that take approximately 4 months to make, from start to finish. The price elasticity of supply for these bedroom sets in the short term is:

Question 19

If your friend says, “I am never going to buy another Avicii remix again!” his price elasticity of demand for Avicii remixes is:

Question 20

Price elasticity of demand is measured as the:

 

Question 1 Which one of the following pairs of goods is likely to have a positive cross­price elasticity of demand?

Question 2 If the income elasticity of demand for noodles is –2 and the percentage change in the quantity consumed is 5%, what is the percentage change in income?

Question 3 The reason that Darren buys a lot more paintings when the price of art falls is that:

Question 4 Howard buys 5 suits a year when he earns $70,000. When his income increases to $200,000, he buys 15 suits a year. From the midpoint method, his income elasticity of demand for suits is:

Question 5 Henry raised his quantity demanded of hockey pucks from 100 to 150 when the price fell from $5 to $3 per puck. Using the midpoint method, his price elasticity of demand is:

Question 6 Robert’s Furniture produces high­quality wooden bedroom sets that take approximately 4 months to make, from start to finish. The price elasticity of supply for these bedroom sets in the short term is:

Question 7 The Sunny Softball league found that, when it changed its ticket prices from $10 to $5, there was a more than proportional but not infinite increase in attendance. The price elasticity of demand is:

Question 8 We would expect to see a positive cross­price elasticity between:

Question 9 What good is most likely to have an income elasticity of demand equal to 0.3?

Question 10 Jane says that she will always spend $20 a week on lattes. Jane’s demand for lattes is price:

Question 11 As you move left along the demand curve, the price elasticity of demand:

Question 12 Firms are indifferent to changing prices when the price elasticity of demand is:

Question 13 Refer to the following graphs to answer the questions that follow: Which of these graphs most likely depicts a price elasticity of demand of –5?

Question 14 If the cross­price elasticity of demand between Good A and Good B is 3, the price of Good B increases, and the price elasticity of demand for Good B is inelastic, we can expect to see a ________ change in the quantity demanded for Good A:

Question 15 If your friend says, “I am never going to buy another Avicii remix again!” his price elasticity of demand for Avicii remixes is:

Question 16 Shawna wins the lottery and her income increases by 60%. She used to buy 10 pints of cottage cheese per month and now she buys 12 pints. Her income elasticity of demand for cottage cheese is ________, making it a(n) ________ good.

Question 17 The initial price of picture frames is $6 and suppliers offer 20 frames. When the price falls to $4, suppliers offer only 10. The price elasticity of supply is:

Question 18 Price elasticity of demand is measured as the:

Question 19 When the price of erasers increases from $1.50 to $2.50, the quantity demanded of pencils is unchanged. The cross­price elasticity of demand between erasers and pencils is ________ because erasers and pencils ________.

Question 20 A 15% increase in the price of cookies results in a 9% decrease in the quantity of cookies sold. The revenue received by cookie suppliers will ________ because the price elasticity of demand for cookies is ________.

 

Question 1 If the price elasticity of supply is 1.5, we know that supply is:

Question 2 Refer to the accompanying table. When the price drops from $5 to $3, price elasticity of demand for sushi (using the midpoint method) at an income of $30,000 is:

Question 3 If the income elasticity of demand for noodles is –2 and the percentage change in the quantity consumed is 5%, what is the percentage change in income?

Question 4 At higher prices, the price elasticity of demand is likely to be __________, whereas it is likely to be __________ at lower prices.

Question 5 If the cross­price elasticity between Good A and Good B is –1.5 and the percentage change in quantity demanded of Good B is 15%, what is the percentage change in the price of Good A?

Question 6 Super Economy Brand products have an income elasticity of –1.4. Thus, these are __________ goods.

Question 7 To keep the percentage change in quantity demanded equally proportional to the percentage change in price when the prices rise by 5%, a consumer would need to ________ quantity demanded by ________.

Question 8 If the percentage change in the quantity consumed of pizza is 8% and the percentage change in income is 2%, what is the income elasticity of demand for pizza?

Question 9 Demand for which of the following goods/services is likely to be the LEAST elastic in a Minnesota winter?

Question 10 The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________.

Question 11 While there are many pizza places in Curtisville, Pappy’s Pizza is known for its distinctive deep­dish pizza with an almost pie­like crust, whereas Momma’s Pizza Pizzazz is comparable to many other restaurants. Pappy’s is likely to find that it can ________ prices to increase total revenue, and Mommas must ________ prices to increase total revenue.

Question 12 The initial price of picture frames is $6 and suppliers offer 20 frames. When the price falls to $4, suppliers offer only 10. The price elasticity of supply is:

Question 13 A producer knows that the price elasticity for his product is –0.5. He wants to increase quantity demanded by 30%. By what percentage does he need to change the price?

Question 14 A 15% increase in the price of cookies results in a 9% decrease in the quantity of cookies sold. The revenue received by cookie suppliers will ________ because the price elasticity of demand for cookies is ________.

Question 15 If the owner of Sally’s Salty Treats finds that, in the long run, she can trade one type of input for another, the price elasticity of supply is:

Question 16 Which one of the following pairs of goods is likely to have a negative cross­price elasticity of demand?

Question 17 Winged Wonders is a specialty store that sells butterfly ornaments. The owner wants to increase her total revenue and knows that the price elasticity of demand for her product is –0.4. What should she do to her price?

Question 18 We would expect to see a positive cross­price elasticity between:

Question 19 The Sunny Softball league found that, when it changed its ticket prices from $10 to $5, there was a more than proportional but not infinite increase in attendance. The price elasticity of demand is:

Question 20 If the cross­price elasticity of demand between Good A and Good B is 3, the price of Good B increases, and the price elasticity of demand for Good B is inelastic, we can expect to see a(n) ________ change in the quantity demanded for Good A.

 

Question 1 Over time, the price elasticity of supply for sunglasses will become more:

Question 2 Demand is almost always more price elastic in the long run because:

Question 3 If the income elasticity of demand is 1.2, the good will be a(n):

Question 4 Winged Wonders is a specialty store that sells butterfly ornaments. The owner wants to increase her total revenue and knows that the price elasticity of demand for her product is – 0.4. What should she do to her price?

Question 5 If a business finds that demand for its good is very price elastic, it knows that:

Question 6 While there are many pizza places in Curtisville, Pappy’s Pizza is known for its distinctive deep­dish pizza with an almost pie­like crust, whereas Momma’s Pizza Pizzazz is comparable to many other restaurants. Pappy’s is likely to find that it can ________ prices to increase total revenue, and Mommas must ________ prices to increase total revenue.

Question 7 When the price of erasers increases from $1.50 to $2.50, the quantity demanded of pencils is unchanged. The cross­price elasticity of demand between erasers and pencils is ________ because erasers and pencils ________.

Question 8 If the owner of Sally’s Salty Treats finds that, in the long run, she can trade one type of input for another, the price elasticity of supply is:

Question 9 Refer to the information in the accompanying table. Without any calculations, you know that sushi is a(n):

Question 10 If the cross­price elasticity of demand between Good A and Good B is –2, the price of Good B increases, and the price elasticity of demand for Good B is elastic, we can expect to see a ________ change in the quantity demanded for Good A.

Question 11 Which one of the following pairs of goods is likely to have a positive cross­price elasticity of demand?

Question 12 Use the following scenario to answer the questions that follow: Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore. The owners raised the price because they believed that the demand for ice cream sandwiches is:

Question 13 The introduction of new gaming systems that can compete effectively with the Nintendo console will make the demand for the Nintendo console become:

Question 14 A local merchant raises the price of his good and finds that his total revenues increase. The demand for this good is:

Question 15 Refer to the accompanying table. When the price drops from $5 to $3, price elasticity of demand for sushi (using the midpoint method) at an income of $30,000 is:

Question 16 When the price elasticity of demand is elastic, a consumer is:

Question 17 For which of the following products should sellers raise the price in order to increase total revenue from college students?

Question 18 Shawna wins the lottery and her income increases by 60%. She used to buy 10 pints of cottage cheese per month and now she buys 12 pints. Her income elasticity of demand for cottage cheese is ________, making it a(n) ________ good.

Question 19 Super Economy Brand products have an income elasticity of –1.4. Thus, these are __________ goods.

Question 20 Which one of the following pairs of goods is likely to have a negative cross­price elasticity of demand?

 

Price elasticity of demand measures the change in:

Select one:

a. price due to the change in demand.

b. quantity demanded due to the change in price.

c. demand due to the change in price.

d. quantity demanded due to the change in price of another good/service.

e. price due to a change in quantity demanded.

If your friend says, “I am never going to buy another Avicii remix again!” his price elasticity of demand for Avicii remixes is:

Select one:

a. inelastic.

b. perfectly elastic.

c. elastic.

d. Yes

e. perfectly inelastic.

From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be ________ than that of hockey players because ________.

Select one:

a. less elastic; hockey players need skates

b. the same; they both skate

c. more elastic; recreational skaters can substitute other activities

d. less elastic; ice skates are an inferior good

e. more elastic; ice skates are a normal good

Assume that a family spends 35% of its income on housing, 20% on travel-related expenses, 10% on utilities, 25% on health care, and 5% on miscellaneous items. Demand for which category will be most responsive to a change in price?

Select one:

a. miscellaneous

b. travel-related expenses

c. utilities

d. health care

e. housing

Question 5

When the price of scooters drops by 5%, the quantity demanded changes by 20%. You know that the price elasticity of demand for scooters is:

Select one:

a. perfectly elastic

b. perfectly inelastic.

c. elastic

d. unitary elastic.

e. inelastic

In the accompanying table, assume that the price of ice skates increases from $10 to $20 per pair. Using the midpoint method, calculate the price elasticity of demand for ice skates for hockey players.

Select one:

a. 0.67

b. 3.00

c. –0.16

d. –6.00

e. 0.11

A producer knows that the price elasticity for his product is –0.5. He wants to increase quantity demanded by 30%. By what percentage does he need to change the price?

Select one:

a. –6%

b. 10%

c. 6%

d. –60%

e. –9.5%

If the price elasticity of demand for Good A is –0.2 and the price increases from $2.25 to $2.75, the percentage change in the quantity demanded of Good A is:

Select one:

a. –100%.

b. –4.0%.

c. unknown because not enough information is provided.

d. 4.0%

e. 100%.

If a business finds that demand for its good is very price elastic, it knows that:

Select one:

a. price is unrelated.

b. the quantity consumers buy is unimportant.

c. price is very important.

d. the effect of price is less important than the impact of the quantity consumers buy.

e. price is unimportant.

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:

Select one:

a. infinite

b. relatively large.

c. proportional to the shift in demand.

d. 0 (zero).

e. relatively small.

When Nina decreases her price of lipstick from $7 to $5, she finds that her sales increase from 6 to 7. She faces ________ demand for her product, and this price change will ________ her total revenue.

Select one:

a. inelastic; lower

b. perfectly elastic; raise

c. elastic; raise

d. perfectly inelastic; lower

e. unitary elastic; not change

Use the following scenario to answer the questions that follow:

Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.

The owners raised the price because they believed that the demand for ice cream sandwiches is:

Select one:

a. perfectly elastic.

b. inelastic

c. relatively price sensitive

d. elastic

e. unitary elastic.

The local National Hockey League (NHL) team decides to lower its ticket prices in order to attract more fans. They are hoping that the:

Select one:

a. quantity increase matters more than the price decrease to total revenue.

b. price elasticity of demand is perfectly inelastic.

c. price decrease matters more than the quantity increase to total revenue.

d. price elasticity of demand is perfectly elastic.

e. price elasticity of demand is unitary elastic.

Income elasticity of demand for professional haircuts is found to be 1.7. This service is a:

Select one:

a. substitute good.

b. normal good and necessity good.

c. luxury good but not a normal good.

d. necessity good but not a normal good.

e. normal good and a luxury good.

If the income elasticity of demand is 0.5, the good will be a(n):

Select one:

a. complement good.

b. substitute good

c. luxury good.

d. inferior good.

e. necessity good.

If the percentage change in the quantity consumed of pizza is 8% and the percentage change in income is 2%, what is the income elasticity of demand for pizza?

Select one:

a. –0.25

b. 0.25

c. –1

d. 4

e. –4

If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5%, what is the percentage change in quantity demanded of Good B?

Select one:

a. –3%

b. –1.25%

c. 10%

d. 1.50%

e. 3%

Question text

Refer to the accompanying table to answer the questions that follow.

The price of erasers increases from $0.50 to $1.00 per eraser. Use the midpoint method to calculate the cross-price elasticity of demand between pencils and erasers.

Select one:

a. –3

b. 0.13

c. –7.67

d. 7.67

e. –0.13

The price elasticity supply of doctors could be considered ________ because it takes a minimum of four to six years of training to be able to work as a physician.

Select one:

a. unitary elastic

b. relatively elastic

c. relatively inelastic

d. perfectly inelastic

e. perfectly elastic

If the price elasticity of supply is 1.5, we know that supply is:

Select one:

a. relatively inelastic.

b. perfectly elastic.

c. relatively elastic

d. unitary elastic.

e. perfectly inelastic.

 

Price elasticity of demand measures the change in:

The reason that Darren buys a lot more paintings when the price of art falls is that:

If your friend says, “I am never going to buy another Avicii remix again!” his price elasticity of demand for Avicii remixes is:

From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be                        than that of hockey players because

Nita is a devoted Coca-Cola consumer, whereas Becky can drink either Coca-Cola or Peps products Nita’s demand for Coca-Cola will be relatively more  while Becky’s demand will be relatively more

Assume that a family spends 35% of its income on housing, 20% on travel-related expenses,

10% on utilities, 25% on health care, and 5% on miscellaneous items. Demand for which category will be most responsive to a change in price?

Jill has a fixed budget and buys all of the items listed below. When will a 20% reduction in price cause her to change the amount she buys the most?

When the price of scooters drops by 5%, the quantity demanded changes by 20%. You know that the price elasticity of demand for scooters is:

At a price of $2, the quantity demanded for pens is 12. When the price increases to $3, the quantity demanded for pens is 10. The price elasticity of demand for pens is:

At a price of $5/hour, Bob wants to hire three workers. When the price rises to $7/hour, Bob wants to hire only two workers. Bob’s price elasticity of demand for workers is:

Zumba classes sell all 20 participant spots at a price of $4.50 each. When the instructor raised the prices to $5.50, 10 people attended the class. From the midpoint method, the price elasticity of demand for Zumba is:

Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing line is −1.5. He is planning to lower prices by 10%. The percentage change in quantity demanded will be:

In the accompanying table, assume that the price of ice skates increases from $10 to $20 per pair. Using the midpoint method, calculate the price elasticity of demand for ice skates for hockey players.

To keep the percentage change in quantity demanded equally proportional to the percentage change in price when the prices rise by 5%, a consumer would need to         quantity demanded by                       .

If a business finds that demand for its good is very price elastic, it knows that:

When quantity demanded and price increase by 10%, you know that price and quantity are                      to the consumer.

Kevin tells the manager at Moo’s Ice Cream that he won’t buy any ice cream cones costing more than $2, but he will buy a limitless number at any price less than $2. His price elasticity of demand for ice cream cones is:

The local bakery calculates the price elasticity of demand for its cinnamon rolls to be −1.25. This tells them that demand is                        and price is buyer.

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:

Jane says that she will always spend $20 a week on lattes. Jane’s demand for lattes is price:

Refer to the following graphs to answer the next five questions.

Graph A

Graph B

Graph C

Graph D

Graph E

Which of these graphs represents relatively price elastic demand for a good?

Which of these graphs represents perfectly price inelastic demand for a good?

Which of these graphs most likely depicts a price elasticity of demand of −5?

Which of these graphs most likely depicts a price elasticity of demand of −0.2?

Graph                            most likely shows the price elasticity of demand for the following situation: Bob’s Boots can sell out its entire stock of shoe polish at $2.50 but can sell none if it raises the price to $2.55.

Firms are indifferent to changing prices when the price elasticity of demand is:

A 15% increase in the price of cookies results in a 9% decrease in the quantity of cookies sold. The revenue received by cookie suppliers will because the price elasticity of demand for cookies

The city of Barlow is known for its wide variety of ice cream shops. What will happen if Nick’s Ice Cream Palace raises the price of its shakes?

Use the following scenario to answer the next two questions: Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.

The demand for ice cream sandwiches is:

The owners raised the price because they believed that the demand for ice cream sandwiches is:

Refer to the accompanying table. The price elasticity of demand of erasers is                          when the price is lowered from $1.50 to $1.00. Sellers of erasers will                      their total revenue from this price change.

The income elasticity of demand for a good measures the responsiveness of                      to a change in                       .

Income elasticity of demand for professional haircuts is found to be 1.7. This service is a:

If the income elasticity of demand is 1.2, the good will be a(n):

If the income elasticity of demand is 0.5, the good will be a(n):

If the income elasticity of demand is −3, the good will be a(n):

A firm knows that Mike’s income elasticity of demand for hair ties is 5 while for Sally it is 0.2. A firm can reason that a hair tie is a(n)                good for Mike while it is Shawna wins the lottery and her income increases by 60%. She used to buy 10 pints of cottage cheese per month and now she buys 12 pints. Her income elasticity of demand for cottage cheese is a               , making it a(n)                      good

Howard buys 5 suits a year when he earns $70,000. When his income increases to

$200,000, he buys 15 suits a year. From the midpoint method, his income elasticity of demand for suits is:

Refer to the information in the accompanying table. Without any calculations, you know that sushi is a(n):

When Clayton starts working at his first full-time job out of college with a $60,000 salary, he is likely to buy more                    and less                    .

When Sue received a promotion at work, her income rose by 50%. The income elasticity of demand for steak was found to be 1.5. For her, steak is a(n):

What good is most likely to have a negative income elasticity of demand?

What good is most likely to have an income elasticity of demand equal to 0.3?

If the cross-price elasticity of demand is −5, Good A and Good B are:

If the cross-price elasticity of demand is 6, Good A and Good B are:

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5%, what is the percentage change in quantity demanded of Good B?

When the price of erasers increases from $1.50 to $2.50, the quantity demanded of pencils is unchanged. The cross-price elasticity of demand between erasers and pencils is                      because erasers and pencils

If the cross-price elasticity of demand between Good A and Good B is 3, the price of Good B increases, and the price elasticity of demand for Good B is inelastic, we can expect to see a(n) change in the quantity demanded for Good A.

If the cross-price elasticity of demand between Good A and Good B is 3, the price of Good B increases, and the price elasticity of demand for Good B is inelastic, we can

A professional hockey arena has a maximum seating capacity of 20,000 people. The price elasticity of supply is:

If the owner of Sally’s Salty Treats finds that, in the long run, she can trade one type of input for another, the price elasticity of supply is:

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly. This indicates that the price elasticity of supply is:

As price elasticity of supply becomes more elastic over time, the overall shape of the supply curve:

Robert’s Furniture produces high-quality wooden bedroom sets that take approximately 4 months to make, from start to finish. The price elasticity of supply for these bedroom sets in the short term is:

Firms supplying twisty-ties decrease the quantity supplied of inputs by 10% when the price decreases by 5%. The price elasticity of supply for twisty-ties is:

Consider two labor markets. In the first, the elasticity of supply is relatively elastic, while it is relatively inelastic in the latter. Imposing a minimum wage in each market would result in                          unemployment in the first market and

If the price elasticity of supply is 1.5, we know that supply is:

 

Price elasticity of demand measures the change in:

a. quantity demanded due to the change in price.

b. demand due to the change in price.

c. quantity demanded due to the change in price of another good/service.

d. price due to a change in quantity demanded.

e. price due to the change in demand.

The reason that Darren buys a lot more paintings when the price of art falls is that:

a. there are many substitutes for paintings.

b. paintings are a necessity.

c. they complement his home décor.

d. his income has risen.

e. art is a luxury.

If your friend says, “I am never going to buy another Avicii remix again!” his price elasticity of demand for Avicii remixes is:

a. perfectly elastic.

b. perfectly inelastic.

c. elastic.

d. inelastic.

e. unitary elastic.

From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be ___________ than that of hockey players because ___________.

Price of Ice Skates

Quantity Demanded (hockey players)

Quantity Demanded (recreational skaters)

$10

95

70

$20

85

50

$40

75

35

$50

65

45

$60

60

50

a. more elastic; ice skates are a normal good

b. less elastic; ice skates are an inferior good

c. the same; they both skate

d. more elastic; recreational skaters can substitute other activities

e. less elastic; hockey players need skates

Nita is a devoted Coca-Cola consumer, whereas Becky can drink either Coca-Cola or Pepsi products. Nita’s demand for Coca-Cola will be relatively more ___________, while Becky’s demand will be relatively more ___________.

a. elastic; inelastic

b. unrelated to price; elastic

c. perfectly elastic; elastic

d. inelastic; elastic

e. unitary elastic; inelastic

Assume that a family spends 35% of its income on housing, 20% on travel-related expenses, 10% on utilities, 25% on health care, and 5% on miscellaneous items. Demand for which category will be most responsive to a change in price?

a. miscellaneous

b. health care

c. utilities

d. travel-related expenses

e. housing

Jill has a fixed budget and buys all of the items listed below. When will a 20% reduction in price cause her to change the amount she buys the most?

a. scented candles, regular price is $25

b. jasmine rice, regular price is $4/lb

c. GAP jeans, regular price is $75

d. flat-screen LCD TV, regular price is $400

e. living room couch, regular price is $300

When the price of scooters drops by 5%, the quantity demanded changes by 20%. You know that the price elasticity of demand for scooters is:

a. perfectly inelastic.

b. inelastic.

c. unitary elastic.

d. elastic.

e. perfectly elastic

At a price of $2, the quantity demanded for pens is 12. When the price increases to $3, the quantity demanded for pens is 10. The price elasticity of demand for pens is:

a. perfectly inelastic.

b. inelastic.

c. horizontal.

d. elastic.

e. perfectly elastic.

At a price of $5/hour, Bob wants to hire three workers. When the price rises to $7/hour, Bob wants to hire only two workers. Bob’s price elasticity of demand for workers is:

a. −0.83

b. −1.20

c. −0.33

d. −0.40

e. −0.10

Zumba classes sell all 20 participant spots at a price of $4.50 each. When the instructor raised the prices to $5.50, 10 people attended the class. From the midpoint method, the price elasticity of demand for Zumba is:

a. −0.50.

b. −3.33.

c. −2.50.

d. 0.20.

e. −0.20.

Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing line is −1.5. He is planning to lower prices by 10%. The percentage change in quantity demanded will be:

a. 15%.

b. 0.15%.

c. 6.66%.

d. 0.06%.

e. 8.50%.

In the accompanying table, assume that the price of ice skates increases from $10 to $20 per pair. Using the midpoint method, calculate the price elasticity of demand for ice skates for hockey players

Price of Ice Skates

Quantity Demanded (hockey players)

Quantity Demanded (recreational skaters)

$10

95

70

$20

85

60

$40

75

45

$50

65

25

$60

60

10

a. −6.00

b. 0.67

c. 0.11

d. −0.16

e. 3.00

Demand is almost always more price elastic in the long run because: 5

a. people’s preferences change.

b. newer versions of a good/service replace older ones.

c. production of the good/service stops.

d. more options become available and people can make different choices.

e. government regulations increase.

To keep the percentage change in quantity demanded equally proportional to the percentage change in price when the prices rise by 5%, a consumer would need to _________ quantity demanded by ___________.

a. increase; 5%

b. decrease; 5%

c. increase; 10%

d. decrease; 10%

e. increase; 2%

If a business finds that demand for its good is very price elastic, it knows that:

a. price is very important.

b. price is unimportant.

c. price is unrelated.

d. the effect of price is less important than the impact of the quantity consumers buy.

e. the quantity consumers buy is unimportant.

When quantity demanded and price increase by 10%, you know that price and quantity are __________ to the consumer.

a. equally important

b. everything

c. nothing

d. relatively important

e. relatively unimportant

Kevin tells the manager at Moo’s Ice Cream that he won’t buy any ice cream cones costing more than $2, but he will buy a limitless number at any price less than $2. His price elasticity of demand for ice cream cones is:

a. perfectly inelastic.

b. inelastic.

c. unitary elastic.

d. elastic.

e. perfectly elastic.

The local bakery calculates the price elasticity of demand for its cinnamon rolls to be −1.25. This tells them that demand is ___________ and price is ___________ to the buyer.

a. inelastic; less important than the quantity

b. elastic; more important than the quantity

c. unitary elastic; on the same level as quantity

d. perfectly inelastic; everything

e. perfectly elastic; meaningless

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:

a. 0 (zero).

b. relatively small.

c. proportional to the shift in demand.

d. relatively large.

e. infinite.

Jane says that she will always spend $20 a week on lattes. Jane’s demand for lattes is price:

a. inelastic.

b. elastic.

c. perfectly inelastic.

d. perfectly elastic. 7

e. unitary elastic.

Refer to the following graphs to answer the next five questions

Which of these graphs represents relatively price elastic demand for a good?

a. Graph A

b. Graph B

c. Graph C

d. Graph D

e. Graph E

Which of these graphs represents perfectly price inelastic demand for a good?

a. Graph A

b. Graph B

c. Graph C

d. Graph D

e. Graph E

Which of these graphs most likely depicts a price elasticity of demand of −5?

a. Graph A

b. Graph B

c. Graph C

d. Graph D

e. Graph E

Which of these graphs most likely depicts a price elasticity of demand of −0.2?

a. Graph A

b. Graph B

c. Graph C 9

d. Graph D

e. Graph E

Graph _____________ most likely shows the price elasticity of demand for the following situation: Bob’s Boots can sell out its entire stock of shoe polish at $2.50 but can sell none if it raises the price to $2.55.

a. A

b. B

c. C

d. D

e. E

Firms are indifferent to changing prices when the price elasticity of demand is:

a. inelastic.

b. perfectly elastic.

c. elastic.

d. unitary elastic.

e. perfectly inelastic.

A 15% increase in the price of cookies results in a 9% decrease in the quantity of cookies sold. The revenue received by cookie suppliers will ___________ because the price elasticity of demand for cookies is _____________.

a. decrease; inelastic

b. increase; elastic

c. decrease; elastic

d. not change; unitary elastic

e. increase; inelastic

The city of Barlow is known for its wide variety of ice cream shops. What will happen if Nick’s Ice Cream Palace raises the price of its shakes?

a. Demand will decrease by a greater proportion than the price.

b. Demand will increase by a greater proportion than the price.

c. The quantity demanded will decrease by a greater proportion than the price.

d. The quantity demanded will increase by a greater proportion than the price.

e. Demand will not change.

Use the following scenario to answer the next two questions: Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.

The demand for ice cream sandwiches is:

a. inelastic.

b. elastic.

c. perfectly inelastic.

d. perfectly elastic.

e. unitary elastic.

The owners raised the price because they believed that the demand for ice cream sandwiches is:

a. inelastic.

b. elastic.

c. relatively price sensitive.

d. perfectly elastic.

e. unitary elastic.

Refer to the accompanying table. The price elasticity of demand of erasers is ____________ when the price is lowered from $1.50 to $1.00. Sellers of erasers will __________ their total revenue from this price change.

Price of Erasers

Quantity Demanded of Erasers

Quantity Demanded of Pencils

$0.50

10

12

$1.00

8

11

$1.50

7

10

$2.00

6

9

$2.50

5            8

 

a. perfectly elastic; not change

b. elastic; raise

c. elastic; lower

d. inelastic; lower

e. inelastic; raise

The income elasticity of demand for a good measures the responsiveness of __________ to a change in ___________.

a. quantity demanded; price of a related good

b. quantity demanded; income

c. demand; price of good

d. quantity demanded; price of a good

e. income; quantity demanded

Income elasticity of demand for professional haircuts is found to be 1.7. This service is a:

a. normal good and necessity good.

b. luxury good but not a normal good.

c. necessity good but not a normal good.

d. substitute good.

e. normal good and a luxury good.

If the income elasticity of demand is 1.2, the good will be a(n):

a. complement good.

b. substitute good.

c. necessity good.

d. inferior good.

e. luxury good.

If the income elasticity of demand is 0.5, the good will be a(n): 12

a. complement good.

b. substitute good.

c. necessity good.

d. inferior good.

e. luxury good.

If the income elasticity of demand is −3, the good will be a(n):

a. complement good.

b. substitute good.

c. necessity good.

d. inferior good.

e. luxury good.

A firm knows that Mike’s income elasticity of demand for hair ties is 5 while for Sally it is 0.2. A firm can reason that a hair tie is a(n) __________ good for Mike while it is a(n) ____________ good for Sally.

a. normal; inferior

b. complement; substitute

c. necessity; luxury

d. inferior; normal

e. luxury; necessity

Shawna wins the lottery and her income increases by 60%. She used to buy 10 pints of cottage cheese per month and now she buys 12 pints. Her income elasticity of demand for cottage cheese is ___________, making it a(n) __________ good.

a. 3; luxury

b. 3.59; normal

c. 0.33; necessity

d. 0.28; inferior

e. −0.33; inferior

Howard buys 5 suits a year when he earns $70,000. When his income increases to $200,000, he buys 15 suits a year. From the midpoint method, his income elasticity of demand for suits is:

a. 1.04

b. 0.96

c. −1.04

d. −0.96

e. 0.08

Refer to the information in the accompanying table. Without any calculations, you know that sushi is a(n):

Price (per roll)

Quantity Demanded (income = $10,000/year)

Quantity Demanded (income = $30,000/year)

$1

5

9

$2

4

8

$3

3

7

$4

2

6

$5

1

5

a. necessity.

b. substitute for fish sticks.

c. normal good.

d. inferior good.

e. complement to sake

When Clayton starts working at his first full-time job out of college with a $60,000 salary, he is likely to buy more _________ and less __________.

a. sushi; canned tuna

b. ramen noodles; steak

c. BMWs; Kias

d. computer hardware; computer software

e. hamburger; salmon

When Sue received a promotion at work, her income rose by 50%. The income elasticity of demand for steak was found to be 1.5. For her, steak is a(n):

a. inferior good. 14

b. necessity.

c. complement to potatoes.

d. substitute for chicken.

e. luxury.

What good is most likely to have a negative income elasticity of demand?

a. steak

b. caviar

c. designer clothing

d. pizza

e. instant noodles

What good is most likely to have an income elasticity of demand equal to 0.3?

a. medication

b. takeout dinner

c. used clothing

d. laptop

e. a download on iTunes

If the cross-price elasticity of demand is −5, Good A and Good B are:

a. inferior goods.

b. complements.

c. substitutes.

d. normal goods.

e. luxury goods.

If the cross-price elasticity of demand is 6, Good A and Good B are:

a. inferior goods.

b. complements.

c. substitutes.

d. normal goods.

e. luxury goods.

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

a. pancakes and waffles

b. fruit and bacon

c. butter and toast

d. potatoes and sausage

e. milk and coffee

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

a. chocolate ice cream and sprinkles

b. ice cream shakes and hamburgers

c. fries and ketchup

d. Pepsi and Coke

e. onion rings and chicken strips

Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

a. tea and coffee

b. soda and water

c. spaghetti and ravioli

d. tennis shoes and flip flops

e. coffee and cream

Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

a. purses and backpacks

b. sofas and dining room tables

c. manicures and pedicures

d. shoes and socks

e. trucks and sedans

If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5%, what is the percentage change in quantity demanded of Good B?

a. 3%

b. 10%

c. −1.25%

d. 1.50%

e. −3%

When the price of erasers increases from $1.50 to $2.50, the quantity demanded of pencils is unchanged. The cross-price elasticity of demand between erasers and pencils is ___

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  • Liberty University ECON 213 quiz 7 complete Answers | Rated A+
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    Question 1 The local bakery calculates the price elasticity of demand for its cinnamon rolls to be –1.25.

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