The formula for cross elasticity of demand is percentage change in: Answer Selected Answer: quantity demanded of X/percentage

change in price of Y. Correct Answer: quantity demanded of X/percentage change in price of Y.

Question 2
4 out of 4 points

If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will: Answer Selected Answer: increase the amount demanded by more than 10 percent. Correct Answer: increase the amount demanded by more than 10 percent.

Question 3
0 out of 4 points

The demand for a product is inelastic with respect to price if: Answer Selected Answer:

a drop in price is accompanied by a decrease in the quantity demanded.

Correct Answer: consumers are largely unresponsive to a per unit price change.

Question 4
0 out of 4 points

(Last Word) Based on the concept of price elasticity of demand, which of the following cases is most likely to occur? Answer Selected Answer: Airlines charging lower fares for business travelers. Correct Answer: Colleges charging lower tuition for low-income students.

Question 5
4 out of 4 points

Antiques tend to have highly inelastic supply curves. Answer Selected Answer: True Correct Answer: True

Question 6
4 out of 4 points

Generally speaking, the demand for luxury goods is more price elastic than is the demand for necessities. Answer

Selected Answer: True Correct Answer: True

Question 7
4 out of 4 points

Cross elasticity of demand measures the effect of a change in the price of one product on the quantity demanded of another product. Answer Selected Answer: True Correct Answer: True

Question 8
4 out of 4 points

Studies of the minimum wage suggest that the price elasticity of demand for teenage workers is relatively inelastic. This means that: Answer Selected Answer:

an increase in the minimum wage would increase the total incomes of teenage workers as a group.

Correct Answer:

an increase in the minimum wage would increase the total incomes of teenage workers as a group.

Question 9
0 out of 4 points

Which of the following generalizations is not correct? Answer Selected Answer:

The larger the number of close substitutes available, the greater will be the price elasticity of demand for a particular product.

Correct Answer:

The price elasticity of demand is greater for necessities than it is for luxuries.

Question 10
4 out of 4 points

The price elasticity of demand of a straight-line demand curve is: Answer Selected Answer: elastic in high-price ranges and inelastic in low-price ranges. Correct Answer: elastic in high-price ranges and inelastic in low-price ranges.

Question 11
4 out of 4 points

The concept of price elasticity of demand measures: Answer

Selected Answer: the sensitivity of consumer purchases to price changes. Correct Answer: the sensitivity of consumer purchases to price changes.

Question 12
4 out of 4 points

The price of old baseball cards rises rapidly with increases in demand because: Answer Selected Answer: the supply of old baseball cards is price inelastic. Correct Answer: the supply of old baseball cards is price inelastic.

Question 13
0 out of 4 points

(Last Word) Microsoft charges a substantially lower price for a software upgrade than for the initial purchase of the software. This implies that Microsoft views the demand curve for the software upgrade to be: Answer Selected Answer: less elastic than the demand for the original software. Correct Answer: more elastic than the demand for the original software.

Question 14
4 out of 4 points

Assume that a 4 percent increase in income across the economy produces an 8 percent increase in the quantity demanded of good X. The coefficient of income elasticity of demand is: Answer Selected Answer: positive and therefore X is a normal good. Correct Answer: positive and therefore X is a normal good.

Question 15
0 out of 4 points

If a firm finds that it can sell $13,000 worth of a product when its price is $5 per unit and $11,000 worth of it when its price is $6, then: Answer Selected Answer: the demand for the product is inelastic in the $6-$5 price range. Correct Answer: the demand for the product is elastic in the $6-$5 price range.

Question 16
4 out of 4 points

When the percentage change in price is greater than the resulting percentage change in quantity demanded: Answer Selected Answer: an increase in price will increase total revenue. Correct Answer: an increase in price will increase total revenue.

Question 17
0 out of 4 points

If the price elasticity of demand for a product is unity, a decrease in price will: Answer Selected Answer: Correct Answer: increase the quantity demanded, but total revenue will be unchanged.

increase the quantity demanded and increase total revenue.

Question 18
4 out of 4 points

A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes. Answer Selected Answer: True

Correct Answer: True

Question 19
4 out of 4 points

If the coefficient of income elasticity of demand is positive, the product is an inferior good. Answer Selected Answer: False Correct Answer: False

Question 20
0 out of 4 points

The supply curve of antique reproductions is: Answer Selected Answer: perfectly inelastic. Correct Answer: relatively elastic.

Question 21
0 out of 4 points

In which of the following cases will total revenue increase? Answer Selected Answer: price rises and demand is elastic Correct Answer: price rises and demand is inelastic

Question 22
0 out of 4 points

If the supply of product X is perfectly elastic, an increase in the demand for it will increase: Answer Selected Answer: equilibrium price but reduce equilibrium quantity. Correct Answer: equilibrium quantity but equilibrium price will be unchanged.

Question 23
4 out of 4 points

If price changes and total revenue changes in the opposite direction, demand is relatively elastic. Answer Selected Answer: True Correct Answer: True

Question 24
4 out of 4 points

The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. Therefore demand for X in this price range: Answer Selected Answer: is elastic. Correct Answer: is elastic.

Question 25
4 out of 4 points

A linear demand curve has a constant elasticity over the full range of the curve. Answer Selected Answer: False Correct Answer: False