Multiple choice concerns.

You are watching: If the price-elasticity coefficient for a good is .75, the demand for that good is described as:

1.The price elasticity of demand also is: a) the proportion of the portion adjust in quantity demanded to the percentage adjust in price. b) the responsiveness of revenue to a change in amount. c) the proportion of the readjust in amount demanded separated by the adjust in price. d) the response of revenue to a adjust in price.

2.If demand is price elastic, then: a) a climb in price will raise total revenue. b) a autumn in price will raise complete revenue. c) a fall in price will lower the amount demanded. d) a increase in price won"t have any impact on complete profits.

3. Complementary items have: a) the same elasticities of demand also. b) exceptionally low price elasticities of demand also. c) negative cross price elasticities of demand through respect to each other. d) positive revenue elasticities of demand.

4. The price elasticity of demand also generally tends to be: a) smaller in the long run than in the short run. b) smaller in the short run than in the lengthy run. c) bigger in the brief run than in the long run. d) unrelated to the size of time.

5. If the price elasticity of supply of doodads is 0.60 and also the price increases by 3 percent, then the quantity supplied of doodads will rise by a) 0.60 percent. b) 0.20 percent c) 1.8 percent d) 18 percent.

6. Suppose we know that the price elasticity of demand also of great X is equal to -1.2. Then, if its price will certainly rise by 5%, we deserve to predict via certainty that a) quantity demanded of that good will rise. b) the revenue of the firm developing that excellent will certainly boost by 6%. c) the revenue of the firm creating that good will certainly decrease by 6%. d) the quantity demanded of that excellent will decrease by 6%. e) Namong the over.

7. A 10% rise in the price of movie ticket in Westridge 8 leads to a 15% decrease in the number of tickets offered, indicating the demand for movie ticket in Westridge 8 is: a) elastic. b) inelastic. c) unit elastic. d) Can not tell from the information provided.

8. If the cross-price elasticity in between 2 commodities is 1.5, a) the 2 goods are luxury products. b) the 2 products are complements. c) the two items are substitutes. d) the two goods are normal goods.

True/False/Uncertain. For each of the adhering to statements, say whether it is true, false, or uncertain and also describe your answer.

1. It is reasonable to intend the cross price elasticity of demand also for golf clubs and golf balls to be positive.

Golf clubs and golf balls are complementary products. This indicates that, as the price of golf clubs boosts (a positive change), the intake of golf balls decreases (a negative change). Cross price elasticity of demand is equal to the proportion of these transforms and will certainly be negative. The statement is false.

2. If the demand also is perfectly elastic, then a change in the supply curve does not impact the equilibrium price.

 True, because a perfectly elastic demand also curve is horizontal. Because of this, no issue what the shift is the equilibrium price will certainly always remajor the same. (See graph.) 3. The demand also curve for autos is even more elastic than the demand curve for Fords.

False. A Ford can be substituted by a different model. It is not as easy to discover a substitute for a car in general. The more substitutes an excellent has actually, the even more elastic is the demand for that excellent. Thus, demand for Fords is more elastic. 4. Suppose you very own a "Here Comes the Sun" tanning salon and the demand also curve for your services is downward sloping. Additional, suppose that a brand-new tanning salon called "Sunny Delight" opens 2 blocks away from your salon. Tell whether the adhering to three statements are true, false or unparticular and explain your answer.

a. The demand also curve for your solutions shifts to the ideal. This brand-new salon is a substitute for your solutions. After it has actually showed up, your consumers have more option, and also some of them will begin using the new salon. So the demand also for your solutions will certainly decrease, or change to the left. The statement is false.

b. The demand also for your services becomes more elastic. One of the components determining the price elasticity of demand also for the great is the number of substitutes. More substitutes - more elastic demand also. The statement is true.

c. The cross-price elasticity of the demand for your services with respect to the price charged by "Sunny Delight" is negative. These two items (services) are substitutes. The cross-price elasticity of substitutes is positive, since as the price of among them increases, the demand for (and also therefore the intake of) the other one increases, too. The statement is false.

Short Answer Question. 5. Initially Hans Johnson was the only consumer in the industry for "Casa de Econ" beer, produced by a small neighborhood brewery. When the price of "Casa de Econ" six-pack varies in between \$10 and also \$20, the price elasticity of his individual demand is equal to negative 1. Now imagine that Hans has actually been cloned 4 times, and also now we have actually 5 similar consumers in the industry for "Casa de Econ". What will take place to the price elasticity of market demand in the price range given above? Will the demand also become even more price elastic, less price elastic, or will certainly elasticity continue to be the same? Exordinary your answer.

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Because elasticity deals with loved one changes, it does not issue exactly how many kind of consumers we have in the market as lengthy as all of them are same. (If the quantity demanded for each of them transforms by 50%, that would certainly suppose the quantity demanded in the whole industry will adjust by 50%, also.) So the price elasticity of demand will stay the very same.