Question

Panel A Panel B Price Demand Demand Quantity Quantity Panel C Panel D Price Price Demand Demand Quantity Quantity

Refer to Figure 5-1. A perfectly elastic demand curve is shown in

		Panel D.
		Panel A.
		Panel C.
		Panel B.

Price per DVD Supply D (1 = 4,000) D(1 = 3,000) 25 30 35 Quantity of DVDs

Refer to Figure 5-5. The data in the diagram indicates that DVDs

		are luxury goods.
		are both luxury goods and price inelastic goods.
		are price inelastic goods.
		are both necessities and price inelastic goods.
		are necessities.

3-

Consider the following pairs of items:  
a. shampoo and conditioner
b. iPhones and earbuds
c. a laptop computer and a desktop computer
d. beef and chicken
e. air-travel and weed killer
Which of the pairs listed will have a negative cross-price elasticity?

		c and d only
		e only
		a, b, and c only
		a and b only

Suppose the value of the price elasticity of demand is -3. What does this mean?

		A 1 percent increase in the price of the product causes demanded quantity to increase by 3 percent.
		A 3 percent increase in the price of the product causes demanded quantity to decrease by 1 percent.
		A 1 percent increase in the price of the product causes demanded quantity to decrease by 3 percent.
		A US$1 increase in price causes demanded quantity to fall by 3 units.

The demand for gasoline in the short run is

		inelastic because there are very few good substitutes for gasoline.
		unit elastic because people tend to consume a stable amount of gasoline per period.
		elastic because people can easily switch to public transportation.
		perfectly inelastic because people have no choice but to buy gasoline

Suppose Sharm City Videos lowers the price of its movie club membership by 10 percent and as a result, CineArts Videos experienced a 16 percent decline in its movie club membership. What is the value of the cross-price elasticity between the two movie club memberships?

		1.6
		0.625
		-1.6
		-0.625

The demand for most farm products is relatively inelastic. With all else constant, what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?

		Farm revenues could increase or decrease depending on the cost of this new equipment.
		Farm revenues decrease.
		Farm revenues remain constant because consumers will not increase their consumption of farm products by much.
		Farm revenues increase.

The price elasticity of the supply of teenage labor services is approximately 1.36. Suppose the minimum wage rises from US$6.60 per hour to US$7.00. Using the midpoint formula, calculate the approximate change in the will the quantity supplied of teenage labor.

		13.6 percent
		8 percent
		5.9 percent
		There is insufficient information to answer the question.

A 5 percent increase in income leads to a 5 percent decrease in quantity demanded for a product. This product is a(n) ________ product and demand is ________.  

		inferior; income inelastic
		normal; income inelastic
		inferior; unit income elastic
		normal; unit income elastic

Good X Good Y Good Z Price Price Price Demand Quantity Quantity Quantity

Refer to Figure 5-6. Identify the two goods which are substitutes.

		It is not possible to distinguish any relationship among the goods.
		Good X and Good Y
		Good X and Good Z
		Good Y and Good Z

Panel A Panel B Price Demand Demand Quantity Quantity Panel C Panel D Price Price Demand Demand Quantity Quantity

Refer to Figure 5-1. A perfectly inelastic demand curve is shown in

		Panel D.
		Panel A.
		Panel C.
		Panel B.

If demand is perfectly price inelastic, the absolute value of the price elasticity coefficient is

		zero.
		infinity.
		equal to the absolute value of the slope of the demand curve.
		more than one.

-Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

True

False

-Suppose at the current price, the demand for copper is estimated at -3.14. What happens to sales revenue if the government imposes a price ceiling below the free market equilibrium price in the copper market?

		Sales revenue remains unchanged because copper is a necessity for most industries.
		It cannot be determined without information on prices.
		Sales revenue rises.
		Sales revenue falls.

The price elasticity of demand is equal to

		the change in quantity demanded divided by the change in price.
		the percentage change in price divided by the percentage change in quantity demanded.
		the percentage change in quantity demanded divided by the percentage change in price.
		the value of the slope of the demand curve.

If 20 units are sold at a price of US$50 and 30 units are sold at a price of US$40, what is the absolute value of the price elasticity of demand? Use the midpoint formula.

		1.8
		1
		0.56
		2.5

In general, a "big ticket item" such as a house or new car will

		tend to have an inelastic demand because it has many substitutes.
		tend to have a more inelastic demand the more time that passes.
		tend to have a more elastic demand than a lower-priced good.
		tend to have an inelastic demand because spending on the item takes up a large share of the average consumer's budget

Hala, an expert in making desserts, made the following statement: "A cup of tea with mint is often the perfect end to a meal, sipped with a piece of my delicious chocolate cake." Evidently, Hala views

		tea with mint and chocolate cake as substitutes to other desserts.
		tea with mint and chocolate cake as complementary goods.
		tea with mint and chocolate cake as luxury items.
		tea with mint and chocolate cake as necessities.

Refer to Figure 5-8. What is the value of the price elasticity of supply between  g and  h?

		0.02
		2
		20 percent
		0.5

If, for a given percentage increase in price, quantity demanded falls by a proportionately larger percentage, then demand is

		perfectly price elastic.
		relatively price elastic.
		relatively price inelastic.
		unit price elastic.

If a product has a negative income elasticity of demand, this indicates that the product is

		a complement with another product.
		a substitute for another product.
		inferior.
		normal.

Answer 1

Page No. Date : Annt A Perfectly Elastic demand Cunue is shown in! Panel (B). A Perfectly Elantic demand lunue is one where the price of the commodity remain fined regardless of the Quantity of the commodity. On Perfectly Elastic Demand Cunue elasticity is (a), infinite. Notes. According to Chegy Policy Eupents are entitled to answer only first Question among the multiple Questions.