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Exam 4: Elasticity

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Question 1

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Winged Wonders is a specialty store that sells butterfly ornaments.The owner wants to increase her total revenue and knows that the price elasticity of demand for her product is -0.4.What should she do to her price?

A) Lower it by a relatively large amount.
B) Leave it unchanged and use another way to increase sales.
C) Decrease it to zero.
D) Raise it by any amount.
E) Lower it by a relatively small amount.

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Question 2

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When you change your quantity demanded of one good because of a change in price of another good,you are acting according to the principle of:

A) price elasticity of demand.
B) cross-price elasticity of demand.
C) income elasticity of demand.
D) price elasticity of supply.
E) income elasticity of supply.

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Question 3

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What good is most likely to have a negative income elasticity of demand?

The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________.

When would oil producers see the largest percentage decline in the quantity demanded for oil due to an increase in the price of oil today?

The percentage change in price is 5%,while the price elasticity of supply is 0.The percentage change in quantity supplied:

Robert's Furniture produces high-quality wooden bedroom sets that take approximately 4 months to make,from start to finish.The price elasticity of supply for these bedroom sets in the short term is:

If the cross-price elasticity of demand is 6,Good A and Good B are:

Assume that a family spends 35% of its income on housing,20% on travel-related expenses,10% on utilities,25% on health care,and 5% on miscellaneous items.Demand for which category will be most responsive to a change in price?

If the price elasticity of supply is 1.5,we know that supply is:

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

Used car dealers find that their sales rise in a recession.We can be certain that consumers view used cars as:

Graph the following situations: a.My cats love Kitty Kat Treats,and I will buy as much as the store has at the current price of $2.But when the price of Kitty Kat Treats increases by even 5 cents,I won't buy any! b.I will buy 20 bags of Kitty Kat Treats at any price. c.If the price of Kitty Kat Treats rises by 5%,I'll decrease my quantity demanded by 10%.

Howard buys 5 suits a year when he earns $70,000.When his income increases to $200,000,he buys 15 suits a year.From the midpoint method,his income elasticity of demand for suits is:

The price elasticity supply of doctors could be considered ________ because it takes a minimum of four to six years of training to be able to work as a physician.

When the price increases by 30% and the quantity demanded drops by 30%,the price elasticity of demand is:

The initial price of picture frames is $6 and suppliers offer 20 frames.When the price falls to $4,suppliers offer only 10.The price elasticity of supply is:

Refer to the accompanying table.The price elasticity of demand of erasers is __________ when the price is lowered from $1.50 to $1.00.Sellers of erasers will __________ their total revenue from this price change.

When the price of scooters drops by 5%,the quantity demanded changes by 20%.You know that the price elasticity of demand for scooters is:

Refer to the accompanying table.When the price drops from $5 to $3,price elasticity of demand for sushi (using the midpoint method) at an income of $30,000 is: