Question 1

Refer to the accompanying table to answer the following questions.
 
-The price of erasers increases from $0.50 to $1.00 per eraser.Using the midpoint method,what is the cross-price elasticity of demand between pencils and erasers?

Accepted Answer

The midpoint method for calculating the cross-price elasticity of demand requires a specific formula and data about the change in quantity demanded for one good in response to a price change in another good. The provided choices seem to contain placeholders or formatting errors (e.g., "F1F1F1S1uf02duf020F1F1F100.13") rather than actual numerical values or formulas, making them incorrect or nonsensical. Without the necessary data on the change in quantity demanded for pencils in response to the price change in erasers, it's impossible to calculate the cross-price elasticity accurately. The correct answer would typically involve applying the midpoint formula to the given data, but since the choices are formatted incorrectly or are placeholders, none provide a meaningful answer.

Question 2

Over time,the price elasticity of supply for sunglasses will become more

Accepted Answer

Over time, the production of sunglasses can be increased, and the supply becomes more responsive to price changes, resulting in an elastic supply curve.

Question 3

If the cross-price elasticity of demand between Good A and Good B is 2,the price of Good B increases,and the price elasticity of demand for Good B is elastic,we can expect to see a ________ change in the quantity demanded for Good A.

Accepted Answer

A positive cross-price elasticity of demand means that the two goods are substitutes. An increase in the price of Good B will lead to a decrease in the quantity demanded of Good B (due to the high price elasticity of demand), which in turn will increase the demand for Good A as consumers switch to the substitute Good A. Since the cross-price elasticity of demand is 2, a 1% increase in the price of Good B will cause a 2% increase in the quantity demanded of Good A. Therefore, we can expect to see a large negative change in the quantity demanded for Good A.

Question 4

The price elasticity of supply is

Accepted Answer

The definition of price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price. Therefore, option B is the best choice.

Question 5

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a(n)________ change in the quantity demanded for Good A.

Accepted Answer

A cross-price elasticity of demand of 3 implies that for every 1% increase in the price of Good B, the quantity demanded for Good A will increase by 3%. However, if the price elasticity of demand for Good B is inelastic, it means that the change in price of Good B will result in a proportionately smaller change in the quantity demanded. Therefore, we can expect to see a small change in the quantity demanded for Good A as a result of the price increase in Good B.

Question 6

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly.This indicates that the price elasticity of supply is

Accepted Answer

The ability to quickly place an order and replenish resources suggests that the supply can respond relatively easily to changes in demand, indicating relatively elastic supply.

Question 7

A perfectly elastic supply curve

Accepted Answer

A perfectly elastic supply curve means that the quantity supplied is infinitely responsive to changes in price. This results in suppliers being able to supply any quantity demanded at a constant price. Therefore, the supply curve is horizontal, with an infinite slope.

Question 8

A local bakery gives information on consumer purchasing habits for muffins and cupcakes.It says that when the price of a muffin is $1,people buy 55 cupcakes.When the price of a muffin is raised to $2,cupcake purchases go up to 65 cupcakes.The cross-price elasticity of demand is

Accepted Answer

The answer of A local bakery gives information on consumer...

Question 9

We would expect to see a positive cross-price elasticity between

Accepted Answer

Ice cream and frozen yogurt are substitute goods, meaning that if the price of one increases, the demand for the other is likely to increase, resulting in a positive cross-price elasticity.

Question 10

Refer to the accompanying table to answer the following questions.
 
-The price of erasers increases from $0.50 to $1.00 per eraser.By what percentage does the quantity demanded of pencils change? (Use the midpoint method. )

Accepted Answer

The answer of Refer to the accompanying table to answer...

Question 11

When the price of pencils increases from $1.50 to $2.50,there is an increase in quantity demanded of pens from 100 to 150.The cross-price elasticity of demand between pencils and pens is

Accepted Answer

The answer of When the price of pencils increases from...

Question 12

When two goods are complements to each other,the cross-price elasticity will

Accepted Answer

When two goods are complements, they have a negative cross-price elasticity, as the price of one good affects the demand for the other in the opposite direction. For example, if the price of coffee increases, the demand for creamer (which is a complement to coffee) will decrease. Therefore, the answer is E.

Question 13

If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5 percent,what is the percentage change in quantity demanded of Good B?

Accepted Answer

The formula for cross-price elasticity of demand is (% change in quantity demanded of good B / % change in price of good A). Given that the cross-price elasticity of demand between A and B is 2 and the percentage change in price of good A is 5%, we can set up the equation:
2 = (% change in quantity demanded of B / 5%)
Solving for the percentage change in quantity demanded of B, we get:
% change in quantity demanded of B = 2 x 5% = 10%
Therefore, the percentage change in quantity demanded of Good B is 10%.

Question 14

Which of the following statements is FALSE?

Accepted Answer

Price elasticity of supply can equal one, indicating unit elasticity where the percentage change in quantity supplied is equal to the percentage change in price.

Question 15

If the owner of Kuji's Treats finds that,in the long run,he can trade one type of input for another,the price elasticity of supply is

Accepted Answer

If the owner of Kuji's Treats finds that he can trade one type of input for another in the long run, it means that he can easily switch to other inputs that may be cheaper or more available. This indicates that the owner can adjust the quantity supplied in response to changes in the price of inputs. Hence, the price elasticity of supply is relatively elastic.

Question 16

When the price of erasers increases from $1.50 to $2.50,the quantity demanded of pencils is unchanged.The cross-price elasticity of demand between erasers and pencils is ________ because erasers and pencils are ________.

Accepted Answer

The cross-price elasticity of demand between erasers and pencils is 0, which means they are unrelated goods. Therefore, none of the choices except for D are correct.

Question 17

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a ________ change in the quantity demanded for Good A.

Accepted Answer

The cross-price elasticity of demand between Good A and Good B is 3, which means that a 1% increase in the price of Good B will lead to a 3% decrease in the quantity demanded for Good A. Since the price elasticity of demand for Good B is inelastic, the quantity demanded for Good B will not change much in response to a change in its price. Therefore, we can expect to see a small positive change in the quantity demanded for Good A.

Question 18

A professional hockey arena has a maximum seating capacity of 20,000 people.The price elasticity of supply is

Accepted Answer

The supply of seats in a professional hockey arena is fixed at 20,000, meaning it cannot change in response to price changes, making it perfectly inelastic.

Question 19

If the supply of a good is perfectly inelastic,then the price elasticity of supply will equal

Accepted Answer

If the supply of a good is perfectly inelastic, it means that the quantity supplied remains the same, regardless of any changes in its price. Therefore, the percentage change in quantity supplied will always be zero, and the price elasticity of supply (PES) will be equal to:

PES = (% change in quantity supplied) / (% change in price)

PES = (0) / (% change in price)

PES = 0

Thus, the best choice is A) zero.

Question 20

A vertical supply curve can be described as

Accepted Answer

A vertical supply curve represents a situation where the quantity supplied is fixed at a certain level, regardless of changes in price. In other words, supply is perfectly inelastic. This can occur, for example, when there is a limited supply of a resource or when production is constrained by capacity limitations.

Quiz 4: Elasticity

Refer to the accompanying table to answer the following questions. -The price of erasers increases from $0.50 to $1.00 per eraser.Using the midpoint method,what is the cross-price elasticity of demand between pencils and erasers?