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# Microeconomics chapter 6-10

D. Hammond Microeconomics 201
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The publisher of an economics textbook finds that when the book's price is lowered from \$70 to \$60, sales rise from 10,000 to 15,000. Using the midpoint method you can calculate that the price elasticity of demand is
2.6
When price goes down, the quantity demanded goes up. Price elasticity measures how:
responsiveness the quantity change is in relation to the price change.
If the price of a good is increased by 20% and the quantity demanded changes by 15% then the price elasticity of demand is equal to:
0.75
Using the midpoint method of elasticity to calculate the price elasticity of demand eliminates the problem of computing:
different elasticities, depending on whether pricedecreases or increases.
if the price of chocolate covered peanuts decreases from \$1.10 to \$0.90 and the quantity demanded increases from 190 bags to 210 bags, this indicates that, if other things are unchanged, the price elasticity of demand using the midpoint method is:
0.5
The price elasticity of demand is computed as the percentage change in:
Quantity demanded divided by the percentage change in price.
The price of gasoline rises 5%and the quantity of gasoline purchased falls 1%. The price elasticity of demand is equal to........ and the demand is described as ........
0.2; inelastic
A local restaurant has estimated that the price elasticity of demand for meals is equal to 2. If the restaurant increases menu prices by 5% they can expect the number of customers to decrease by___ and total revenue to ____.
10%;fall
If the price of tacos increases from 1\$ to 2\$, and customers decrease their consumption from 10 tacos to 8 tacos, what is the price elasticity of demand, using the midpoint method?
1/3
As calculated, the price elasticity of demand is:
Always negative
Suppose the price elasticity of demand for cheeseburgers equals 0.37. This means the overall demand for cheeseburgers is:
price inelastic
You manage a popular nightclub and lately revenues have been disappointing. Your bouncer suggests that raising drink prices will increase revenues, but your bartender suggests that decreasing drink prices will increase revenues. You arent sure who is right but you do know that:
Your bouncer thinks the demand for drinks is inelastic, while your bartender thinks the demand for drinks is elastic.
Suppose the price for gasoline increases 10% and quantity demanded in Orlando drops 5% per day. The price elasticity of demand for gasoline in orlando is:
Price inelastic
On a linear demand curve:
demand is elastic at high prices.
If an increase in the price of a good leads to an increase in total revenue, then:
the demand curve must be price inelastic.
The price elasticity of a good will tend to be greater:
The longer the relevant time period.
To say that two goods are substitutes, their cross-price elasticities of demand should be:
Greater than 0
To say that two goods are complements, their cross-price elasticities of demand should be:
less than 0
The percent change in quantity demanded divided by the percentage in income, all other things unchanged, is:
Income elasticity of demand
If the income elasticity of demand for a good is positive, the good is said to be A(N)
Normal Good
If the income elasticity of demand for a good is negative, the good is said to be A(n)
Inferior Good
When demand for foods low in carbs began to increase, in the short run the price elasticity of supply was lower than it will be in the long run. This is because:
In the short run, some food producers did not have as much time to produce low-carb foods as they will in the long run.
If the quantity supplied responds substantially to a relatively small change in price, supply would be:
Price -elastic
If the price elasticity of supply is greater than 1, then:
Supply is price elastic
The price elasticity of supply is computed as the percentage change in:
Quantity supplied divided by the percentage change in price.
The supply curve for a good will be more elastic if:
production inputs are readily available at a relatively low cost.
An attorney supplies 40 hours of work per week when her fee is \$100 per hour, but supplies 60 hours of work per week when her fee rises to \$120 per hour. Using the midpoint formula, her elasticity of supply is equal to______.
2.2
It is very difficult for julia to find inexpensive and available inputs for her business. because of this, we would predict that Julia's price elasticity of supply would be:
Inelastic
If the price elasticity of supply is greater than 1:
Supply is price elastic.