Multiple choice questions.

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1.The price elasticity of demand is: a) the ratio of the percentage readjust in quantity demanded to the percentage change in price. b) the responsiveness that revenue to a readjust in quantity. C) the proportion of the adjust in quantity demanded separated by the readjust in price. D) the solution of revenue to a change in price.

2.If demand is price elastic, then: a) a climb in price will raise total revenue. B) a fall in price will certainly raise total revenue. c) a fall in price will lower the amount demanded. D) a rise in price won"t have any kind of effect on full revenues.

3. Complementary items have: a) the very same elasticities that demand. B) really low price elasticities the demand. C) an adverse cross price elasticities of need with respect to every other. d) positive income elasticities of demand.

4. The price elasticity of need generally tends to be: a) smaller in the long run 보다 in the short run. B) smaller in the brief run than in the long run. c) bigger in the brief run 보다 in the long run. D) unrelated to the size of time.

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

6. Mean we understand that the price elasticity of need of an excellent X is same to -1.2. Then, if that price will rise by 5%, we can predict through certainty the a) quantity demanded the that good will increase. B) the revenue of the firm developing that an excellent will increase by 6%. C) the revenue of the firm developing that great will decrease by 6%. D) the amount demanded of that good will diminish by 6%. e) none of the above.

7. A 10% increase in the price of movie ticket in Westridge 8 leads to a 15% diminish in the number of tickets sold, indicating the demand for movie ticket in Westridge 8 is: a) elastic. b) inelastic. C) unit elastic. D) deserve to not tell indigenous the information given.

8. If the cross-price elasticity in between two assets is 1.5, a) the two items are luxury goods. B) the two items are complements. C) the two products are substitutes. d) the two items are typical goods.

True/False/Uncertain. because that each of the complying with statements, say even if it is it is true, false, or uncertain and explain her answer.

1. The is reasonable to mean the cross price elasticity of demand for golf clubs and golf balls to it is in positive.

Golf clubs and golf balls space complementary goods. This method that, as the price of golf clubs increases (a confident change), the intake of golf balls decreases (a negative change). Overcome price elasticity of need is same to the proportion of this changes and will be negative. The statement is false.

2. If the need is perfectly elastic, then a shift in the it is provided curve go not influence the equilibrium price.

True, since a perfect elastic need curve is horizontal. Therefore, no matter what the change is the equilibrium price will always remain the same. (See graph.)

3. The need curve for autos is an ext elastic 보다 the demand curve because that Fords.

False. A Ford deserve to be substituted through a various model. That is not as simple to uncover a substitute because that a automobile in general. The an ext substitutes a great has, the much more elastic is the need for that good. Therefore, need for Fords is much more elastic. 4. Mean you very own a "Here come the Sun" tan salon and also the demand curve because that your services is downward sloping. Further, intend that a new tanning salon referred to as "Sunny Delight" opens up two blocks far from your salon. Tell even if it is the complying with three statements are true, false or uncertain and also explain your answer.

a. The demand curve because that your solutions shifts to the right. This new salon is a substitute for your services. After ~ it has actually appeared, your consumers have an ext choice, and some of castle will begin using the brand-new salon. Therefore the need for your services will decrease, or shift to the left. The explain is false.

b. The need for your services becomes more elastic. Among the factors determining the price elasticity of demand for the an excellent is the variety of substitutes. More substitutes - much more elastic demand. The statement is true.

c. The cross-price elasticity that the demand for your services with respect come the price charged by "Sunny Delight" is negative. These two products (services) room substitutes. The cross-price elasticity that substitutes is positive, since as the price of one of them increases, the demand for (and therefore the intake of) the various other one increases, too. The declare is false.

Short prize Question. 5. At first Hans Johnson was the only customer in the industry for "Casa de Econ" beer, developed by a tiny local brewery. Once the price the "Casa de Econ" six-pack varies between $10 and also $20, the price elasticity that his individual need is same to an adverse 1. Now imagine that Hans has been cloned 4 times, and now we have 5 similar consumers in the market for "Casa de Econ". What will happen to the price elasticity the market demand in the price variety given above? will certainly the demand become much more price elastic, much less price elastic, or will certainly elasticity stay the same? describe your answer.

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Since elasticity encounters relative changes, it doesn"t matter how plenty of consumers we have actually in the sector as lengthy as every one of them are same. (If the amount demanded for each of them changes by 50%, that would average the quantity demanded in the whole market will readjust by 50%, too.) for this reason the price elasticity of demand will stay the same.