Question 1

Assume the price of textbooks rises from $90 to $110 and the quantity supplied increases from 750 to 850 per week.Using the initial price method the price elasticity of supply is:
A)1.67.
B).60.
C)1.5.
D).12.

Accepted Answer

The price elasticity of supply is calculated using the formula: (Percentage change in quantity supplied) / (Percentage change in price). The percentage change in quantity supplied is ((850-750)/750)*100 = 13.33%, and the percentage change in price is ((110-90)/90)*100 = 22.22%. Therefore, the elasticity is 13.33% / 22.22% = 0.60.

Question 2

Would you expect the income elasticity of demand for Cadillacs to be positive or negative? Why?

Accepted Answer

The answer of Would you expect the income elasticity of...

Question 3

Billy's income elasticity of demand for ground beef is -0.5 and his income elasticity of demand for pork chops is 1.2.Is ground beef a normal or inferior good? Explain.What about pork chops?

Accepted Answer

The answer of Billy's income elasticity of demand for ground...

Question 4

The cross elasticity of demand between natural gas and electricity is 1.1.Therefore,electricity and natural gas must be substitutes.

Accepted Answer

A cross elasticity of demand of 1.1 indicates that a 1% increase in the price of natural gas results in a 1.1% increase in the demand for electricity, suggesting that they are substitutes.

Question 5

If the supply curve is relatively flat,then the price elasticity of supply will be:
A)relatively large.
B)relatively low.
C)negative.
D)decreasing at an increasing rate.

Accepted Answer

A relatively flat supply curve indicates that the quantity supplied of a good or service can be easily increased or decreased in response to a change in price. This suggests that suppliers are relatively responsive to price changes, leading to a relatively large price elasticity of supply.

Question 6

The cross elasticity between natural gas and heating oil is estimated to be 2.3.The cross elasticity between natural gas and electricity is estimated to be -0.8.What is the relationship between natural gas and heating oil? What is the relationship between natural gas and electricity? Explain.

Accepted Answer

The answer of The cross elasticity between natural gas and...

Question 7

What does the cross elasticity of demand measure? How is it calculated?

Accepted Answer

The answer of What does the cross elasticity of demand...

Question 8

If crude-oil prices increase as the total amount of gasoline increases,the supply curve for gasoline will be relatively steep and the price of elasticity of supply of gasoline will be:
A)relatively large.
B)perfectly vertical.
C)perfectly horizontal.
D)relatively low.

Accepted Answer

If crude-oil prices increase as the total amount of gasoline increases, the supply curve for gasoline will be relatively steep, indicating that the price elasticity of supply of gasoline will be relatively low. This means that as the price of gasoline increases, the quantity supplied will not change significantly. In other words, the producers of gasoline are not able to increase the quantity supplied much even if the price of gasoline increases. Hence, the supply curve will be steep and the elasticity of supply will be relatively low.

Question 9

Suppose that the elasticity of supply is 0.60 and the price increases by 5%.We will predict a percent increase in the quantity supplied of:
A)8.33.
B)12.
C)3.
D)6.

Accepted Answer

The elasticity of supply is 0.60, meaning that for every 1% increase in price, the quantity supplied increases by 0.60%. Therefore, a 5% increase in price would result in a 3% increase in quantity supplied (0.60 * 5% = 3%).

Question 10

What does the price elasticity of supply measure?
A)the responsiveness of the quantity supplied to changes in price
B)the responsiveness of the quantity demanded to the change in price
C)the responsiveness of total revenue to the change in price
D)none of the above

Accepted Answer

The price elasticity of supply measures the extent to which the quantity supplied of a good or service changes in response to a change in its price. Option B is incorrect as it refers to the price elasticity of demand. Option C refers to the concept of elasticity of demand and has nothing to do with elasticity of supply. Option D is incorrect as it does not provide any answer.

Question 11

Would you expect the cross elasticity of demand between ham and turkey to be positive or negative? Why?

Accepted Answer

The answer of Would you expect the cross elasticity of...

Question 12

What does the income elasticity of demand measure? How is it calculated?

Accepted Answer

The answer of What does the income elasticity of demand...

Question 13

If the supply curve is relatively steep,then the price elasticity of supply will be:
A)elastic.
B)inelastic.
C)unit elastic.
D)greater than one.

Accepted Answer

If the supply curve is relatively steep, then a small change in price will not have a significant impact on the quantity supplied. As a result, the price elasticity of supply will be relatively low, meaning that the supply curve is inelastic.

Question 14

Suppose the price elasticity of supply for rocking chairs is 1.2 and the price increases by 20%.The quantity supplied will increase by ________ %.
A)20
B)24
C)18
D)12

Accepted Answer

The price elasticity of supply is 1.2, meaning that for every 1% increase in price, the quantity supplied increases by 1.2%. Therefore, a 20% increase in price will result in a 20% * 1.2 = 24% increase in quantity supplied.

Question 15

Suppose the price elasticity of supply for poker chips is .7 and the price decreases by 30%.The quantity supplied will decrease by ________ %.
A)25
B)30
C)15
D)21

Accepted Answer

The price elasticity of supply is 0.7, meaning a 1% decrease in price results in a 0.7% decrease in quantity supplied. Therefore, a 30% decrease in price results in a 30% * 0.7 = 21% decrease in quantity supplied.

Question 16

When Robert's income increases,he buys more new clothes.If the income elasticity is positive-indicating a positive relationship between his income and his demand-then new clothes are a normal good for Robert.

Accepted Answer

A positive income elasticity indicates that as Robert's income increases, his demand for new clothes also increases, suggesting that new clothes are a normal good for him.

Question 17

The price elasticity of supply is generally:
A)negative.
B)zero.
C)positive.
D)decreasing at an increasing rate.

Accepted Answer

The price elasticity of supply measures the responsiveness of quantity supplied to changes in price. If the quantity supplied increases significantly when the price increases, then the price elasticity of supply is said to be positive. Conversely, if the quantity supplied does not change much when the price changes, the price elasticity of supply is said to be low or even zero. Rarely, if the quantity supplied decreases when the price rises, then the price elasticity of supply is said to be negative.

Question 18

If the price of laptop computers decreases from $550 to $500 and the quantity supplied decreases from 15,000 to 12,000 per week.Using the initial price method the price elasticity of supply is:
A)1.2.
B)2.2.
C).2.
D)2.

Accepted Answer

The answer of If the price of laptop computers decreases...

Question 19

A perfectly inelastic supply is represented by a ________ supply curve.
A)vertical
B)downward sloping
C)horizontal
D)upward sloping

Accepted Answer

A perfectly inelastic supply means that regardless of the change in price, the quantity supplied will remain constant. This is best represented by a vertical supply curve as it shows a fixed quantity supplied at all prices.

Question 20

What does the income elasticity of demand measure? How is it calculated?

Accepted Answer

The answer of What does the income elasticity of demand...

Quiz 5: Elasticity: a Measure of Responsiveness

Assume the price of textbooks rises from $90 to $110 and the quantity supplied increases from 750 to 850 per week.Using the initial price method the price elasticity of supply is:

Would you expect the income elasticity of demand for Cadillacs to be positive or negative? Why?

Billy's income elasticity of demand for ground beef is -0.5 and his income elasticity of demand for pork chops is 1.2.Is ground beef a normal or inferior good? Explain.What about pork chops?

The cross elasticity of demand between natural gas and electricity is 1.1.Therefore,electricity and natural gas must be substitutes.

If the supply curve is relatively flat,then the price elasticity of supply will be:

The cross elasticity between natural gas and heating oil is estimated to be 2.3.The cross elasticity between natural gas and electricity is estimated to be -0.8.What is the relationship between natural gas and heating oil? What is the relationship between natural gas and electricity? Explain.

What does the cross elasticity of demand measure? How is it calculated?

If crude-oil prices increase as the total amount of gasoline increases,the supply curve for gasoline will be relatively steep and the price of elasticity of supply of gasoline will be:

Suppose that the elasticity of supply is 0.60 and the price increases by 5%.We will predict a percent increase in the quantity supplied of:

What does the price elasticity of supply measure?

Would you expect the cross elasticity of demand between ham and turkey to be positive or negative? Why?

What does the income elasticity of demand measure? How is it calculated?

If the supply curve is relatively steep,then the price elasticity of supply will be:

Suppose the price elasticity of supply for rocking chairs is 1.2 and the price increases by 20%.The quantity supplied will increase by ________ %.

Suppose the price elasticity of supply for poker chips is .7 and the price decreases by 30%.The quantity supplied will decrease by ________ %.

When Robert's income increases,he buys more new clothes.If the income elasticity is positive-indicating a positive relationship between his income and his demand-then new clothes are a normal good for Robert.

The price elasticity of supply is generally:

If the price of laptop computers decreases from $550 to $500 and the quantity supplied decreases from 15,000 to 12,000 per week.Using the initial price method the price elasticity of supply is:

A perfectly inelastic supply is represented by a ________ supply curve.

What does the income elasticity of demand measure? How is it calculated?