Elasticity

If P = $10 for Tiny Tee-shirts, Q = 20, but if P = $5, Q = 25. The price elasticity of demand for Tiny Tee-shirts is:

• 3.0.

• 1/3

• 1/2

• 21

If the price of Kellogg's Corn Flakes goes up from $1.89 to $2.05 and quantity demanded changes from 250 to 210, then the price elasticity of demand would be:

• 0.47

• 0.02

• 250

• 2.14

Alyssa’s Floral Shoppe dropped its prices for a dozen roses from $45 to $35 this year. Because of this decrease in price, the quantity sold increased from 1000 to 1500. The price elasticity of demand for Alyssa’s roses is:

• 1.00.

• 1.6.

• 0.625.

• 2.25

The income elasticity of demand is a measure of the:

• relative responsiveness of quantity demanded to changes in income.

• absolute change in demand yielded by an absolute change in income.

• slope of the income-consumption curve.

• negative slope of a market demand curve.

If the income elasticity of market demand is negative, most consumers view the good as:

• a luxury good

• having many imperfect substitutes.

• an inferior good.

• ) a normal good.

If average income rises from $18,000 per year to $22,000 per year and annual gasoline consumption per household rises from 1000 to 1500 gallons, the income elasticity of demand for gas is:

• in the inferior range

• 0.5

• 1

• 2

If two goods have negative price cross‑elasticities of demand, the goods are:

• inferior goods.

• luxury goods.

• complementary goods:

• substitute goods.

If a price hike from $15 to $20 for DVD disks causes sales of DVD players to fall from 100 to 50 units, the coefficient of cross-elasticity of demand between these goods is roughly:

• ‑1/10.

• ‑10.

• - 7/3.

• -3/7.

A 2% price cut for doodads causes gizmo sales to fall by 3%. The price cross elasticity of demand between these goods is roughly _____ and these goods are _____.

• ‑2/3, substitutes.

• 1.5, substitutes.

• 2/3, complements.

• ‑1.5, complements.

If Ford raises pickup truck prices 20% and Chevy pickup sales rise 12%, then these goods are _____ and their cross elasticity coefficient is roughly _____.

• complements; ‑0.6.

• substitutes; 0.6.

• substitutes; ‑1.67.

• inferior; 1.67.