Question

6.If price elasticity of demand of peaches is -5, then a 10% increase in the price of peaches would result in which of the following? (2 points)

a. Quantity demanded decreases by 2%

b. Quantity demanded decreases by 50%

c. Quantity demanded increases by 2%

d. Quantity demanded increases by 50%

9.Elasticity of demand depends on ______ while the elasticity of supply depends on _________ ? (2 points)

a. Poor availability of complementary goods ; How fast opportunity cost falls

b. Large availability of complementary goods ; How fast opportunity cost rises

c. Poor availability of substitute goods ; How fast opportunity cost rises

d. Large availability of substitute goods ; How fast opportunity cost rises

e. None of the above

10. Which of the following would you expect to have the least elastic demand? (Hint: For each option below, find out which one has the least number of substitutes ) (1 point)

a. Food

b. Bread

c. Multigrain bread

d. Multigrain grain bread from Ingles

e. All the above items will have the same elasticity of demand

11. What would happen in the market for oatmeal cookies if the price of multigrain cookies ( a substitute) increased and a huge flood destroys a significant portion of the wheat plants from which oats are made? ( 2 points) a. The equilibrium price of oats increases but the impact on equilibrium quantity is uncertain

b. The equilibrium price of oats decreases but the impact on equilibrium quantity is uncertain

c. The equilibrium quantity of oats increases but the impact on equilibrium price is uncertain

d. The equilibrium quantity of oats decreases but the impact on equilibrium price is uncertain

12..Which of the following options would make the demand for Hershey’s chocolate syrup more elastic? ( 2 points) a. An improvement in quality of Hershey’s chocolate syrup

b. Launching of five other chocolate syrups by five other companies

c. Hershey’s goes bankrupt

d. Chocolate syrup is found to increase the risk of diabete

Answer 1

Question 6

b) Quantity demanded decreases by 50%

Price elasticity if demand is a ratio of percentage change in quantity demanded by percentage change in price. In the question it is given that price elasticity of demand for peaches is -5. A negative value of price elasticity of demand shows the negative relationship between price and quantity demanded. Also it is given that there is a 10% increase in price of peaches.

Ep=%change in quantity demanded / %change in price

Therefore as price of peaches increases by 10%, the quantity demanded of peaches decreases by 50%