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Terms in this set (32)For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good? The good is a luxury. If a 15% increase in price for a good results in a 20 percent decrease in quantity demanded, the price elasticity of demand is 1.33 Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the Flatter the demand curve will be. When small changes in price lead to infinite changes in quantity demanded, demand is perfectly Elastic, and the demand curve will be horizontal. Marcus says that he would smoke one pack of cigarettes each day regardless of the price. If he is telling the truth, Marcus's Demand for cigarettes is perfectly inelastic. Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is Unit elastic. When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is 0.67, and an increase in price will result in an increase in total revenue for good A. Skip's Sealcoating Service increased its total monthly revenue from $12,000 to $13,500 when it raised the price of driveway repairs from $600 to $750. The price elasticity of demand for Skip's Sealcoating Service is 0.47 You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that The mayor thinks demand is inelastic, and the city manager thinks demand is elastic. If the demand for donuts is elastic, then a decrease in the price of donuts will Increase total revenue of donut sellers. Your younger sister needs $50 to buy a new bike. She has opened a lemonade stand to make the money she needs. Your mother is paying for all of the ingredients. She currently is charging 25 cents per cup, but she wants to adjust her price to earn the $50 faster. If you know that the demand for lemonade is elastic, what is your advice to her? Lower the price to increase total revenue. Income elasticity of demand measures how The quantity demanded changes as consumer income changes. For which of the following goods is the income elasticity of demand likely lowest? Water. Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is Positive, and the good is a normal good. When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. Using the midpoint method, we can conclude that for Heather, macaroni Is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1. Cross-price elasticity of demand measures how The quantity demanded of one good changes in response to a change in the price of another good. If the cross-price elasticity of two goods is negative, then the two goods are Complements For which pairs of goods is the cross-price elasticity most likely to be positive? Pens and Pencils The price elasticity of supply measures how much The quantity supplied responds to changes in the price of the good. If the price elasticity of supply is 1.5, and a price increase led to a 1.8 percent increase in quantity supplied, then the price increase is about 1.20 percent. If the price elasticity of supply is 1.2, and price increased by 5 percent, quantity supplied would Increase by 6 percent. A manufacturer produces 400 units when the market price is $10 per unit and produces 600 units when the market price is $12 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about 2.2 Demand is said to be price elastic if Buyers respond substantially to changes in the price of the good. Demand is said to be inelastic if The quantity demanded changes only slightly when the price of the good changes. Which of the following is not a determinant of the price elasticity of demand for a good? The steepness or flatness of the supply curve for the good Goods with many close substitutes tend to have More elastic demands. For a good that is a luxury, demand Tends to be elastic. A good will have a more inelastic demand, the Broader the definition of the market. The demand for grape-flavored Hubba Bubba bubble gum is likely Elastic because there are many close substitutes for grape-flavored Hubba Bubba.
Suppose the price of a bag of frozen chicken nuggets decreases from $6.50 to $5.75 and, as a result, the quantity of bags demanded increases from 600 to 800. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is 2.33 For which of the following types of goods would the price elasticity of demand be relatively large?
Luxuries. When demand is inelastic, an decrease in price will cause A decrease in total revenue. Students also viewedPsych Exam #4: Terms and Definitions146 terms hyattb2002 Econ Exam 2 Scott12 terms savanna_zanielPlus Econ Midterm 2106 terms Emma_Marco World Religion Midterm/FInal Terms57 terms alexaboon Other sets by this creatorMicroecon Ch.1419 terms jennaneighborsPlus Econ Exam 2 pt 312 terms jennaneighborsPlus Econ Exam 2 pt 210 terms jennaneighborsPlus Econ Exam 2 pt 110 terms jennaneighborsPlus Verified questionspsychology the problem with staying organized is that staying organized______. Verified answer
finance **Components of Bond Returns** [LO2] Bond $\mathrm{P}$ is a premium bond with a coupon rate of $9$ percent. Bond $D$ has a coupon rate of $5$ percent and is currently selling at a discount. Both bonds make annual payments, have a YTM of $7$ percent, and have $10$ years to maturity. What is the current yield for Bond P? For Bond D? If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D? Explain your answers and the interrelationships among the various types of yields. Verified answer
question Find the standard error of the mean for each sampling situation (assuming a normal population). What happens to the standard error each time you quadruple the sample size? a. $\sigma=32, n=4$ b. $\sigma=32, n=16$ c. $\sigma=32, n=64$ Verified answer
algebra Compute the total and annual returns on the following investment. You pay $\$ 8000$ for a municipal bond. When it matures after $20$ years, you receive $\$ 12,500$. Verified answer Other Quizlet setsAstronomy chapter 5 review questions19 terms danielspeir947 Chapter 39 - Vehicle Extrication and Special Rescue31 terms gabriellewattsss Practice Test 1- P&C180 terms Vanessacortez12 CSTUDYGUIDE140 terms Alec_Sajo For which pairs of goods is the cross price elasticity most likely to be positive pens and pencils?Option c.
This option is correct because pens and pencils are substitutes for each other. It means as pen price rises then demand for pencils also rises and as pen price falls then demand pencils also falls. It shows that they have positive cross-price elasticity of demand.
For which pairs of goods is the cross price elasticity most likely to be positive canoes and kayaks?cats and cat food. Since canoes and kayaks are close substitutes, they will have a positive cross-price elasticity.
When the cross price elasticity is positive?A negative cross elasticity denotes two products that are complements, while a positive cross elasticity denotes two products are substitutes. If products A and B are complements, an increase in the price of B leads to a decrease in the quantity demanded for A, as A is used in conjunction with B.
For which of the following pairs is the cross price elasticity most likely negative?negatively sloped. price-elastic. The pair of items that is most likely to have a negative cross-price elasticity of demand is: ketchup and coffee.
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For which pairs of goods is the cross price elasticity most likely to be positive quizlet?
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