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Exam 6: Describing Supply and Demand: Elasticities

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Question 51

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If pizzas and quesadillas are substitutes and the price of pizzas decreases, we would expect to see:

A) an increase in the demand for quesadillas.
B) a decrease in the demand for quesadillas.
C) an increase in the quantity demanded for quesadillas.
D) a decrease in the quantity demanded for quesadillas.

E) A) and B)
F) B) and C)

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Question 52

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Refer to the graph shown. When price rises by 10 percent, quantity supplied rises by 10 percent. Which curve best demonstrates the elasticity of supply in this example?

A) A
B) B
C) C
D) D

E) C) and D)
F) B) and D)

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Question 53

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Measuring the price of gasoline in dollars, an economist calculates the price elasticity of demand to be .5. What would the price elasticity of demand be if the economist had chosen to measure the price of gasoline in pennies rather than dollars?

If Portuguese wines are an inferior good, higher incomes will cause:

Refer to the graph shown. At which point is elasticity 1?

What are substitute goods? Give an example.

A marketing student observes that when the price of ice cream rises by 10 percent, the quantity of ice cream a supplier is willing to sell rises by 5 percent. The student correctly concludes that the elasticity of supply for ice cream is:

Why is substitution the key factor in determining how elastic or inelastic a demand curve will be? Under what conditions will demand be more elastic?

If macaroni and cheese is an inferior good, falling incomes will tend to:

Consider the following three diagrams: (a)Which of the diagrams above demonstrates a unit elastic supply curve? How can you tell? (b)Which of the diagrams above demonstrates an inelastic supply curve? How can you tell?

When the price of a good increases, what would we expect to see in the markets for its substitutes?

Refer to the table shown to answer the question. Between $2 and $2.20, demand is: $\begin{array} { | c | c | } \hline \text { Price } & \text { Quantity Demanded } \\\hline \$ 1.60 & 130 \\\hline \$ 1.80 & 120 \\\hline \$ 2.00 & 110 \\\hline \$ 2.20 & 100 \\\hline \$ 2.40 & 90 \\\hline \$ 2.60 & 80 \\\hline\end{array}$

If the price elasticity of demand for a good is inelastic, a price change causes:

Elasticity of demand for bus services is 0.23 for the peak hours and 0.42 for off-peak hours. The same percentage increase in price would:

If average movie attendance is 250 million when prices are $9 a ticket and 200 million when prices are $11 a ticket, the elasticity of demand for movie tickets is about:

It is estimated that a 3 percent drop in the price of Asian and European cars will decrease the demand for American cars by 0.84 percent. From this information one can conclude that:

The demand for a good is elastic. Which of the following would be the most likely explanation for this?

Suppose the demand for roses increases from 500 to 600 stems when income rises from $10,000 to $20,000. Income elasticity for roses is:

The supply curve with the greatest elasticity is one with slope of:

Refer to the table shown to answer the question. Between $1.60 and $1.80, demand is: $\begin{array} { | c | c | } \hline \text { Price } & \text { Quantity Demanded } \\\hline \$ 1.60 & 130 \\\hline \$ 1.80 & 120 \\\hline \$ 2.00 & 110 \\\hline \$ 2.20 & 100 \\\hline \$ 2.40 & 90 \\\hline \$ 2.60 & 80 \\\hline\end{array}$