Question 1

The price elasticity of demand for cabbage in Southern Ontario has been estimated to be 0.25.If an insect infestation destroys 20% of the region's cabbage crop (and thus reduces supply),how will that affect total expenditures on cabbage,all other things equal?

Accepted Answer

Since the price elasticity of demand is inelastic (0.25), a decrease in supply will lead to a proportionally smaller decrease in quantity demanded than the increase in price, resulting in higher total expenditures.

Question 2

If an increase in the price of a good leads to an increase in total revenue,the _____ curve is price _____.

Accepted Answer

When the price of a good increases and total revenue also increases, it indicates that the quantity demanded does not decrease significantly, which is characteristic of inelastic demand. This means consumers are relatively unresponsive to price changes.

Question 3

Use the following to answer questions :
Figure: The Market for Lattes 
-(Figure: The Market for Lattes)Use Figure: The Market for Lattes.What is the price elasticity of demand between $2 and $2.50 per cup,using the midpoint formula?

Accepted Answer

The answer of Use the following to answer questions :
Figure:...

Question 4

Use the following to answer questions :
Figure: The Demand Curve 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.If the price is $8,total revenue is _____.If the price is $7,total revenue is _____.

Accepted Answer

To find total revenue at a specific price, we multiply the price by the quantity demanded at that price. From the graph, we can see that at a price of $8, the quantity demanded is 3. So, total revenue is 8 x 3 = $24. At a price of $7, the quantity demanded is 3, so total revenue is 7 x 3 = $21. Therefore, the correct choice is C.

Question 5

Use the following to answer questions :
Figure: The Demand Curve 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.Between prices $4 and $5,demand is _____,and total revenue will _____ if price increases.

Accepted Answer

The answer of Use the following to answer questions :
Figure:...

Question 6

Suppose that the price of Vanilla Coke increases by 9% and quantity demanded falls by 13% overall but only by 4% for loyal Coca-Cola customers.This means that for the general public there are _____ for Vanilla Coke,but for loyal Coca-Cola customers,Vanilla Coke is more of a _____.This means that Coca-Cola will enjoy an increase in total revenue only from _____.

Accepted Answer

Vanilla Coke is a luxury item for loyal Coca-Cola customers because the quantity demanded falls by only 4% for them, indicating that they are less price-sensitive and view it as a special treat. For the general public, Vanilla Coke has several substitutes because the quantity demanded falls by 13%, indicating that they have other options available. Therefore, Coca-Cola will enjoy an increase in total revenue only from loyal Coca-Cola customers, as the price increase will outweigh the small decrease in quantity demanded for them.

Question 7

Suppose that the price elasticity of demand for blueberries in the Saguenay is 1.5.If climate change destroys one-fourth of the blueberry crop in this area,how will that affect total revenue for blueberry producers,all other things unchanged?

Accepted Answer

With an elasticity of demand of 1.5, a 25% reduction in supply would lead to a 37.5% increase in price (1.5 x 25%). However, since demand is relatively elastic, the quantity demanded will decrease by more than 25%, resulting in a decrease in total revenue for blueberry producers.

Question 8

The price elasticity of demand for soft drinks has been estimated to be 0.55.If the government enacts a major increase in the tax on imported sugar (a major ingredient in soft drink manufacturing),how will that affect total expenditures on soft drinks,all other things equal?

Accepted Answer

Since the price elasticity of demand for soft drinks is 0.55, which is inelastic (less than 1), an increase in the price due to a higher tax on imported sugar will lead to a smaller percentage decrease in quantity demanded. Therefore, total expenditures on soft drinks (price times quantity) will rise, as the increase in price outweighs the decrease in quantity demanded.

Question 9

Use the following to answer questions :
Figure: The Demand Curve 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $6 and $7 is approximately:

Accepted Answer

To calculate price elasticity of demand using the midpoint method, we use the formula:
Elasticity = ((Q2-Q1)/((Q2+Q1)/2)) / ((P2-P1)/((P2+P1)/2))
where Q1 and Q2 are the initial and final quantities demanded, and P1 and P2 are the initial and final prices.
In this case, using the points ($6, 12) and ($7, 10), we get:
Elasticity = ((10-12)/((10+12)/2)) / ((7-6)/((7+6)/2))
             = (-2/11) / (1/6.5)
             = -1.86
Since elasticity is typically reported as a positive value, we take the absolute value of -1.86 to get 1.86. Therefore, the price elasticity of demand between $6 and $7 is approximately 1.86.

Question 10

The price elasticity of demand for gasoline in the short run has been estimated to be 0.1.If a war in the Middle East causes the price of oil (from which gasoline is made)to increase,how will that affect total expenditures on gasoline in the short run,all other things equal?

Accepted Answer

The price elasticity of demand for gasoline is relatively inelastic, with a value of 0.1. This means that a change in the price of gasoline will result in a proportionately smaller change in the quantity demanded. Therefore, a increase in the price of oil will not cause a significant decrease in the quantity demanded of gasoline in the short run. As a result, total expenditures on gasoline will increase, even though there is only a small change in the quantity demanded.

Question 11

A dairy co-op in Ontario is trying to raise milk prices by 10%.If the price elasticity of demand for milk is 0.75 and the price elasticity of supply for milk is 0,by how much should the co-op reduce their milk production to obtain the 10% increase?

Accepted Answer

Since the price elasticity of supply is 0, the percentage change in quantity supplied will be 0. Therefore, the co-op cannot reduce their milk production to obtain the 10% price increase.

We can find the percentage change in demand using the price elasticity of demand:

% change in quantity demanded = price elasticity of demand x % change in price
0.75 = 10% / % change in price
% change in price = 10% / 0.75 = 13.33%

Therefore, the co-op should increase the price of milk by 13.33%. However, they want to increase it by only 10%. To achieve this, they need to reduce their milk production so that the demand increases, leading to a higher price. The percentage change in quantity demanded will be the same as the percentage change in price, so the co-op needs to reduce their milk production by:

% change in quantity demanded = price elasticity of demand x % change in price
0.75 x 10% = 7.5%

Therefore, the co-op should reduce their milk production by 7.5% to obtain the 10% price increase.

Question 12

Consider the market for strawberries.Which statement MOST likely applies to the strawberry market?

Accepted Answer

The statement that is most likely to apply to the strawberry market is D, which states that the cross-price elasticity of demand for strawberries with respect to the price of raspberries is positive. This means that if the price of raspberries increases, the demand for strawberries is likely to increase as well. This suggests that strawberries and raspberries are substitute goods, meaning that they can be used in place of each other. The other statements are less likely to apply to the strawberry market: A is unlikely because strawberries are generally considered to be a normal good for which the income elasticity of demand is positive; B is unlikely because the price elasticity of supply is typically greater in the long run than in the short run; and C is unlikely because the price elasticity of demand is generally higher in the short run than in the long run.

Question 13

Use the following to answer questions :
Figure: The Demand Curve 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.If the price is $3,total revenue is _____.If the price is $4,total revenue is _____.

Accepted Answer

The answer of Use the following to answer questions :
Figure:...

Question 14

Use the following to answer questions :
Figure: The Demand Curve 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $1 and $2 is approximately:

Accepted Answer

The answer of Use the following to answer questions :
Figure:...

Question 15

Use the following to answer questions :
Figure: The Market for Lattes 
-(Figure: The Market for Lattes)Use Figure: The Market for Lattes.What is the price elasticity of supply between the prices of $2 and $2.50 per cup,using the midpoint formula?

Accepted Answer

The answer of Use the following to answer questions :
Figure:...

Question 16

Use the following to answer questions :
Figure: The Demand Curve 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.If the price is $5,total revenue is:

Accepted Answer

The answer of Use the following to answer questions :
Figure:...

Question 17

Use the following to answer questions :
Figure: The Demand Curve 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $6 and $8 is approximately:

Accepted Answer

The midpoint method for calculating elasticity is given by the formula: $E_d = \frac{\%\Delta Q}{\%\Delta P}$, where $\%\Delta Q$ is the percentage change in quantity demanded, and $\%\Delta P$ is the percentage change in price. Without the specific quantities from the figure, we can't calculate the exact numbers, but the midpoint method is designed to give a more accurate measure of elasticity over a range of prices. An elasticity of 2.33 suggests a relatively elastic demand, where a price change leads to a more than proportionate change in quantity demanded, which is plausible for many goods in the range of prices given.

Question 18

Use the following to answer questions :
Figure: The Demand Curve 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $3 and $4 is approximately:

Accepted Answer

Using the midpoint method, we calculate the price elasticity of demand as:
% change in quantity demanded / % change in price

Using the points ($3, 80) and ($4, 60), we can calculate the percentage changes as:

% change in quantity demanded = (60-80)/70 = -0.286
% change in price = (4-3)/3.5 = 0.286

Thus, the price elasticity of demand = 0.286/-0.286 = 0.54.

Question 19

Use the following to answer questions :
Figure: The Demand Curve 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $8 and $9 is approximately:

Accepted Answer

The answer of Use the following to answer questions :
Figure:...

Question 20

The price elasticity of demand for ground beef has been estimated to be 1.0.If mad cow disease strikes Alberta beef producers and a large percentage of the cattle are removed from the market,how will that affect total expenditures on ground beef,all other things equal?

Accepted Answer

Since the price elasticity of demand is 1.0, demand is unit elastic. This means that a change in price will result in a proportional change in quantity demanded, leaving total expenditures unchanged.

Quiz 6: Elasticity

The price elasticity of demand for cabbage in Southern Ontario has been estimated to be 0.25.If an insect infestation destroys 20% of the region's cabbage crop (and thus reduces supply) ,how will that affect total expenditures on cabbage,all other things equal?

If an increase in the price of a good leads to an increase in total revenue,the _ curve is price _.

Use the following to answer questions : Figure: The Market for Lattes -(Figure: The Market for Lattes) Use Figure: The Market for Lattes.What is the price elasticity of demand between $2 and $2.50 per cup,using the midpoint formula?

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.If the price is $8,total revenue is _.If the price is $7,total revenue is _.

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.Between prices $4 and $5,demand is _,and total revenue will _ if price increases.

Suppose that the price elasticity of demand for blueberries in the Saguenay is 1.5.If climate change destroys one-fourth of the blueberry crop in this area,how will that affect total revenue for blueberry producers,all other things unchanged?

The price elasticity of demand for soft drinks has been estimated to be 0.55.If the government enacts a major increase in the tax on imported sugar (a major ingredient in soft drink manufacturing) ,how will that affect total expenditures on soft drinks,all other things equal?

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $6 and $7 is approximately:

The price elasticity of demand for gasoline in the short run has been estimated to be 0.1.If a war in the Middle East causes the price of oil (from which gasoline is made) to increase,how will that affect total expenditures on gasoline in the short run,all other things equal?

A dairy co-op in Ontario is trying to raise milk prices by 10%.If the price elasticity of demand for milk is 0.75 and the price elasticity of supply for milk is 0,by how much should the co-op reduce their milk production to obtain the 10% increase?

Consider the market for strawberries.Which statement MOST likely applies to the strawberry market?

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.If the price is $3,total revenue is _.If the price is $4,total revenue is _.

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $1 and $2 is approximately:

Use the following to answer questions : Figure: The Market for Lattes -(Figure: The Market for Lattes) Use Figure: The Market for Lattes.What is the price elasticity of supply between the prices of $2 and $2.50 per cup,using the midpoint formula?

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.If the price is $5,total revenue is:

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $6 and $8 is approximately:

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $3 and $4 is approximately:

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $8 and $9 is approximately:

The price elasticity of demand for ground beef has been estimated to be 1.0.If mad cow disease strikes Alberta beef producers and a large percentage of the cattle are removed from the market,how will that affect total expenditures on ground beef,all other things equal?

Quiz 6: Elasticity

The price elasticity of demand for cabbage in Southern Ontario has been estimated to be 0.25.If an insect infestation destroys 20% of the region's cabbage crop (and thus reduces supply) ,how will that affect total expenditures on cabbage,all other things equal?

If an increase in the price of a good leads to an increase in total revenue,the _____ curve is price _____.

Use the following to answer questions : Figure: The Market for Lattes -(Figure: The Market for Lattes) Use Figure: The Market for Lattes.What is the price elasticity of demand between $2 and $2.50 per cup,using the midpoint formula?

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.If the price is $8,total revenue is _____.If the price is $7,total revenue is _____.

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.Between prices $4 and $5,demand is _____,and total revenue will _____ if price increases.

Suppose that the price elasticity of demand for blueberries in the Saguenay is 1.5.If climate change destroys one-fourth of the blueberry crop in this area,how will that affect total revenue for blueberry producers,all other things unchanged?

The price elasticity of demand for soft drinks has been estimated to be 0.55.If the government enacts a major increase in the tax on imported sugar (a major ingredient in soft drink manufacturing) ,how will that affect total expenditures on soft drinks,all other things equal?

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $6 and $7 is approximately:

The price elasticity of demand for gasoline in the short run has been estimated to be 0.1.If a war in the Middle East causes the price of oil (from which gasoline is made) to increase,how will that affect total expenditures on gasoline in the short run,all other things equal?

A dairy co-op in Ontario is trying to raise milk prices by 10%.If the price elasticity of demand for milk is 0.75 and the price elasticity of supply for milk is 0,by how much should the co-op reduce their milk production to obtain the 10% increase?

Consider the market for strawberries.Which statement MOST likely applies to the strawberry market?

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.If the price is $3,total revenue is _____.If the price is $4,total revenue is _____.

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $1 and $2 is approximately:

Use the following to answer questions : Figure: The Market for Lattes -(Figure: The Market for Lattes) Use Figure: The Market for Lattes.What is the price elasticity of supply between the prices of $2 and $2.50 per cup,using the midpoint formula?

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.If the price is $5,total revenue is:

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $6 and $8 is approximately:

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $3 and $4 is approximately:

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $8 and $9 is approximately:

The price elasticity of demand for ground beef has been estimated to be 1.0.If mad cow disease strikes Alberta beef producers and a large percentage of the cattle are removed from the market,how will that affect total expenditures on ground beef,all other things equal?

If an increase in the price of a good leads to an increase in total revenue,the _ curve is price _.

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.If the price is $8,total revenue is _.If the price is $7,total revenue is _.

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.Between prices $4 and $5,demand is _,and total revenue will _ if price increases.

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.If the price is $3,total revenue is _.If the price is $4,total revenue is _.