Chapter 6 (study lots)

Question 1

The price elasticity of supply is computed as the percent change in——-divided by the percent change in———

Answer 1

Quantity supplied, price

Question 2

If the price of Eminem pant candies increases, and the demand for cherry flavored, soft drinks decreases, these two goods are——

Answer 2

Complementary goods

Question 3

Suppose there is a sudden increase in the supply of kiwis that cause the price of cuties to fall from 10:50 to 9:50 per basket at the local market. In response, quantity demand increases from 19.2 to 20.8 baskets per month given this information, the price elasticity of demand is.

Answer 3

0.80.

Question 4

Suppose the price of rye increases by 16.53%. If the stroller is by 3.28% less barley after the price increases, the total revenue for rye is producers will——-because the——-effect is greater than the——-effect

Answer 4

Increase, price, quantity

Question 5

Suppose you’re a big fan of subway sandwiches, and that as your income increases your trips to the local restaurant increase. We can assume that you consider subway sandwiches a.——— good

Answer 5

Normal

Question 6

As Edwins annual income increases from 40,000 to 50,000 his purchases of tickets to see LA kings hockey games increase from 2 to 4 per year. Calculated using the midpoint method his income elasticity of demand for LA Kings hockey tickets is.—-/and hockey tickets are a—— good

Answer 6

+3, normal

Question 7

There are several close substitutes for Tylenol, but relatively few substitutes for a complete medical examination. Therefore, all other things equal, you would expect the demand for.

Answer 7

Tylenol to be more elastic than the demand for medical examinations

Question 8

The Bellagio hotel in Las Vegas has a fixed capacity of 3950 rooms in the short run. Which statement best describes the short run elasticity of supply for rooms at this hotel.

Answer 8

The elasticity of supply is zero in the short run because the short run supply curve is vertical

Question 9

Since the demand for roasted peanuts decreases as the price of pecans increases, we can assume that these two goods are

Answer 9

Compliments

Question 10

The power of items that is most likely to have a negative cross price elasticity of demand is

Answer 10

Hamburgers and ketchup

Question 11

Because demand curves are usually downward sloping, the price elasticity of demand is

Answer 11

Usually negative

Question 12

Which statement is likely to be associated with an elastic supply

Answer 12

The inputs necessary for production can readily be increased

Question 13

If the price of burritos increases from one dollar to two dollars and consumer is a decrease the consumption from 10 burritos to eat burritos, what is the price elasticity of demand, obtained using the midpoint method?

Answer 13

0.33.

Question 14

For which good is the cross price elasticity of demand most likely a large positive number

Answer 14

French fries and onion rings

Question 15

The cross price elasticity of demand between Fanta and Dr Pepper has been estimated at 0.61. If the price of Dr Pepper Falls by 10%, the quantity demanded of Fanta will.

Answer 15

Decreased by 6.1%

Question 16

When the percentage change in price is greater than the percentage change in quantity demanded, demand is said to be

Answer 16

Inelastic

Question 17

Jack Torres chocolate in New York City is the only producer of golden Easter bunnies in the world. Jack recently expanded his production company from 1000 to 2000 Bonnie’s per Easter season. If the price elasticity of demand for golden Easter, bunnies is 3.33, how much will the company have to reduce its price to sell the additional 1000 bunnies by the midpoint formula?

Answer 17

20%

Question 18

The elasticity of supply message, the responsiveness of

Answer 18

Quantity supplied to change in price

Question 19

Suppose the price of cupcakes decreases by 3% and the quantity demanded increases by one percent per day demand for cupcakes is

Answer 19

Price inelastic

Question 20

Suppose the cross price elasticity of demand between Taco Bell tacos and Carnitas tacos is 0.75. If Carnitas increases the price of its tacos by 15%

Answer 20

Taco Bell sell 11.25% more tacos.

Question 21

A group of Artisanal cheese producers, and Vermont is trying to raise Artisanal cheese prices by 10%. If the price elasticity of demand for Arsenal cheese is 0.75 and the price elasticity of supply for Artisanal cheese is zero, I how much did farmers reduce the Artisanal cheese production to obtain a 10% increase

Answer 21

7.5%

Question 22

A fruit stand manager has estimated that the price elasticity of demand for exotic fruit is two. If the fruit stand increases menu prices by 5%, she can expect the quantity of exotic fruit sold to decrease by.——-and total revenue to——-

Answer 22

10%, fall

Question 23

Price elasticity of demand along a linear demand curve

Answer 23

Increases an absolute value as the price increases

Question 24

Suppose the price elasticity of demand for Cannondale bicycles is 0.5. If there’s a steel shortage because of striking steel workers that restricts steel production, what will happen to total revenue for Cannondale bicycles, all other things equal

Answer 24

Total revenue will rise