Cross Price Elasticity - Revision

The quantity of peanuts supplied increased from 40 tons/week to 60 tons/week when the price of peanuts increased from $4/ton to $5/ton. The price elasticity of supply for peanuts over this price range is:

• Elastic
• Inelastic
• Unit Elastic
• Perfectly Inelastic

If a 10 percent increase in the price of a good leads to a 25 percent decrease in the quantity demanded of a good, demand is:

• Relatively inelastic
• Relatively elastic
• Perfectly elastic
• Perfectly inelastic

 If the price elasticity of demand for a product equals 1, as its price rises the:

• Quantity demanded does not change.
•  Total revenue increases.
•  Total revenue does not change
•  Quantity demanded increases.

A 10 percent decrease in income decreases the quantity demanded of scented candles by 3 percent. The income elasticity of demand for scented candles is:

• 0.3
• -0.3
• 3
• -3.3

The price elasticity of demand is:

• the ratio of the percentage change in quantity demanded to the percentage change in price.

• the responsiveness of revenue to a change in quantity.

• the ratio of the change in quantity demanded divided by the change in price.

• the response of revenue to a change in price.

.If demand is price elastic, then:

• a rise in price will raise total revenue.

• a fall in price will raise total revenue.

• a fall in price will lower the quantity demanded.

• a rise in price won't have any effect on total revenues.

Complementary goods have:

• the same elasticities of demand.

• very low price elasticities of demand.

• negative cross price elasticities of demand with respect to each other.

• positive income elasticities of demand.

The price elasticity of demand generally tends to be:

• smaller in the long run than in the short run.

• smaller in the short run than in the long run.

• larger in the short run than in the long run.

• unrelated to the length of time.

If the price elasticity of supply of doodads is 0.60 and the price increases by 3 percent, then the quantity supplied of doodads will rise by

• 0.60 percent

• 0.20 percent

• 1.8 percent

• 18 percent

Suppose we know that the price elasticity of demand of good X is equal to -1.2. Then, if its price will increase by 5%, we can predict with certainty that

• quantity demanded of that good will increase

• the revenue of the firm producing that good will increase by 6%.

• the revenue of the firm producing that good will decrease by 6%.

• the quantity demanded of that good will decrease by 6%.

• None of the above.