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Question 35

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Suppose the local university charges $85 per credit hour. If tuition increases from $85 to $93 per credit hour, using the midpoint method, what is the percentage change in price?

Select one:

a. 8.62 percent

b. 9.12 percent

c. 9.41 percent

d. 8.00 percent

e. 8.99 percent

Question 36

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Suppose the Chicago Bears football team raises ticket prices by 13 percent and as a result the quantity of tickets demanded decreases by 21 percent. This response means that the demand for Bears tickets is

Select one:

a. elastic.

b. inelastic.

c. unit elastic.

d. perfectly elastic.

e. perfectly inelastic.

Question 37

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Perfectly inelastic demand means that consumers

Select one:

a. will buy a certain quantity, regardless of price.

b. decrease their consumption as price rises.

c. will buy a huge, almost infinite amount more, if the price falls just a little.

d. are willing to buy any quantity of the good at a given price, but none at higher prices.

e. increase their consumption as price rises.

Question 38

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If a good has many close substitutes, then its demand is most likely

Select one:

a. elastic or inelastic depending on whether the price of the good is increasing or decreasing.

b. perfectly inelastic.

c. inelastic.

d. elastic.

e. unit elastic.

Question 39

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One reason why the demand for gasoline is inelastic is because

Select one:

a. people have a long time to shop around for automobiles that use less gas.

b. gasoline is a luxury item.

c. substitutes for gas abound.

d. buses run on diesel fuel rather than gasoline.

Answer 1

Suppose the Chicago Bears football team raises ticket prices by 13 percent and as a result the quantity of tickets demanded decreases by 21 percent. This response means that the demand for Bears tickets is

Select one:

a. elastic.

Elasticity = 21/13 > 1 so elastic demand

Perfectly inelastic demand means that consumers

a. will buy a certain quantity, regardless of price.
Exp: Example of inelastic demand is that of medicines.

If a good has many close substitutes, then its demand is most likely

d. elastic.

Exp: Greater the number of substitues, greater is the elasticity.