Question

(64)Suppose that the quantity of oranges sold increases by 45 percent when the price of tangerines increases by 25 percent. What is the coefficient of cross price elasticity of demand for these fruits?

(a)2.5

(b)3.2

(c)1.8

(d)0.3

(65)Given the coefficient of cross price elasticity of demand for the fruits in Q#64 above, which of the following statements is true?

(a)They are complements

(b)Their demand curve is negatively sloped

(c)Their cross elasticity of demand is negative

(d)None of the above

(66)Which of the following statements is true?

In the very short run period:

(a)The price elasticity of supply is very elastic

(b)The price elasticity of demand is very elastic

(c)The price elasticity of supply is very inelastic

(d)Income elasticity of demand is perfectly elastic

(67)Suppose that when the price of cherries is $10 per lb, the quantity supplied of cherries is 20 lbs. When price of cherries is $6 per lb, the quantity supplied of cherries is 12 lbs. The price elasticity of supply is:

(a)1.7

(b)1.0

(c)2.5

(d)0.8

(69)Suppose you are a member of a local soccer club. The goal of your soccer club is to increase the amount of revenue earned from ticket sales in the local competition. Two executives of the soccer club, Evadney and Felix suggest that the solution is to increase ticket prices. Are Evadney and Felix correct?

(a)They are correct if the demand for tickets is price elastic

(b)They are correct if the demand for tickets is unitary elastic

(c)They are correct if the demand for tickets is price inelastic

(d)They are incorrect if the demand for tickets is price inelastic`

(72)Which of the following statements is true?

Suppose CD players are classified as normal goods then it would be expected that:

(a)Consumers buy less when the price falls and vice versa

(b)Consumers buy less when income rises and vice versa

(c)Consumers buy more when income rises and vice versa

(d)More information needed to answer this question

Answer 1

64. Option C. 1.8

Explanation: Coefficient of cross-price elasticity of demand = % change in quantity demanded / % change in price = 45/25 = 1.8

65. Option D. None of the above

Explanation: When the price of one good increases and the quantity demanded of another good increase because of that, the goods are substitutes.

66. Option C. The price elasticity of supply is very inelastic

Explanation: It takes time to make an adjustment to supply. So, in the very short-run, supply is inelastic.