Question

7) A government wants to reduce electricity consumption by 20%. The price elasticity of demand for electricity is -5. The government must ________ the price of electricity by ________.

a) raise; 4.0%

b) raise; 0.25%

c) raise; 1.25%

d) lower; 0.25%

8) If the quantity demanded of Sony PS3 decreased by 8% when the price of Nintendo Wii decreases by 16%, the cross price elasticity of demand between PS3 and wii is

a) 0.5.

b) -5.

c) -2

d) 2

9) The All Smiles Greeting Card Company wants to increase the quantity of greeting cards it sells by 10%. If the price elasticity of demand is -2.5, the company must

a) increase price by 4.0%.

b) decrease price by 4.0%.

c) increase price by 0.25%.

d) decrease price by 0.25%.

10) If the cross-price elasticity of demand between shrimp and oysters is 4, then a 2% increase in the price of shrimp will result in a ________ in the quantity of oysters demanded.

a) 0.5% increase

b) 8% increase

c) 4% increase

d) 2% decrease

Answer #1

a) The price elasticity of the electricity is 5% then an increase in the price of the electricity by 4% will lead to a drop in the demand by 20%, the answer is "A", raise price by 4%.

b) "C"

8 /-16 = -2, the cross price elasticity of the tow goods in the market will be -2.

c) "B"

Price elasticity = % change in the demand / % change in the price.

-2.5 = 10 / (x) = 4%, the price need to be decreased by 4%.

d) "B"

it will lead to an 8% increase in the price of the oyster in the market.

6) The price elasticity of demand for new cars is 1.2. If
automobile manufacturers raise their price, then __________.
A) total revenue will fall.
B) total revenue will remain unchanged.
C) total revenue will increase.
D) total revenue will fall initially but eventually rise.
7) Read the article entitled “Alcohol Policy and Sexually
Transmitted Diseases”. You can find the article on Moodle or
Canvas. The article was a direct application of the following
elasticity concept:
A) Price Elasticity of Demand...

Suppose that the price elasticity of demand for bus trips is
equivalent to │ED│ = 0.5. While the income elasticity of demand for
bus trips is equal to EI = - 0.1 and the cross elasticity of demand
for bus trips with respect to the price of gasoline is E Bus,
Gasoline = - 0.2.
to. Would an increase in the price of the bus ticket increase or
decrease the revenue of the bus company?
b. If the price of...

QUESTION 36 The price elasticity of demand for Alpha personal
computer is estimated to be -2.0. If the price of the computers
decreases by 5%, what would be the expected percentage changes in
the quantity demanded and in the total revenue for the company? a)
Quantity demanded would decrease by 10% and total revenue would
decreases by 5%. b) Quantity demanded would increase by 10% and
total revenue would increases by 5%. c) Quantity demanded would
decrease by 10% and...

if
the price elasticity of demand ed is equal to 2 then a 20% increase
in quantity demanded would result in a
A. None of the above
B. 10% decrease in price
C. 10% increase in price
D. 40% increase in price
E. 20% decrease in price

If the price elasticity of demand is -2, a 1 percent decrease in
price will
A. double the quantity demanded. B. increase the revenue. C.
decrease the revenue. D. increase the demand by 2%. E. Both B and D
are correct.

A 10 percent increase in the price of soda leads to a 20 percent
increase in the quantity of iced tea demanded. It appears that:
a) elasticity of demand for soda 0.5 and is inelastic.
b) elasticity of demand for iced tea is 2 and is elastic.
c) cross-price elasticity of demand for soda is -0.5.
d) cross-price elasticity of demand for iced tea is 2.

1-As we move up the demand curve, the price elasticity of demand
* A) increases B) decreases C) becomes unitary D) does not
change
2-If the price of lemonade increases relative to the price of
grape juice, the demand for: * A) grape juice will decrease. B)
grape juice will increase. C) lemonade will decrease. D) lemonade
will increase.
3-An increase in price will result in no change in total revenue
if: * A) the percentage change in price is...

1) The income elasticity of demand for Good Z is –0.2, while the
cross-price elasticity of demand between Good Z and Good Y is 1.63.
Which of the following statements is correct regarding Good Z?
Group of answer choices
Good Z is a inferior good, and Goods Z and Y are
complements.
Good Z is an inferior good, and Goods Z and Y are
substitutes.
Good Z is a normal good, and Goods Z and Y are complements.
Good Z...

Determine the price elasticity of demand, the cross-price
elasticity of demand or the income elasticity in the following
scenarios.
a. Consider the market for coffee. Suppose the price rises from
$4 to $6 and quantity demanded falls from 120 to 80. What is price
elasticity of demand? Is coffee elastic or inelastic?
b. John’s income rises from $20,000 to $22,000 and the quantity
of hamburger he buys each week falls from 2 pounds to 1 pound. What
is his income...

1. What is the numerical value for the price elasticity of
demand if a price change causes no change in quantity
demanded?________ What is the numerical value for elasticity of
demand if a price change causes no change in total revenue?________
What is the elasticity of demand for a horizontal demand
curve?________ What is the elasticity of demand if a price increase
leads to an increase in total revenue? elastic /
inelastic. What is the numerical value for the elasticity...

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