Chapter 6 ECON – Flashcards
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If 100 shirts are sold when unit price is $10, while 75 shirts are sold when the unit price is $15, one can conclude that in this place range:
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Demand for the shirts is inelastic
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Suppose you are given the following data on demand for a product. The Price elasticity of demand (based on the midpoint formula) when price decreases from $9 to $7 is:
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1.60
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If a 5 percent cut in the price of a product causes the quantity demanded to rise by 10 percent, the demand is:
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Elastic
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Refer to the above graphs. Which graph shows the immediate market period for Supply?
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Graph C
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What is the most likely effect of the development of DVDs, rental movies, and online movie streaming on the movie theater industry?
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Increased price elasticity of demanded for movie theater tickets
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Refer to the graph above. Which demand curve is perfectly inelastic?
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D5
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You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1. To increase total revenues from that product, you should:
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Increase the price of the software
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A 3 percent increase in the price of tea causes a 6 percent increase in the demand for coffee. The cross elastically of demand for coffee with respect to the price of tea is:
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+2.0
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If a 10 percent increase in the price of one good results in no change in the quantity demanded of another good, then it can be concluded that the two goods are:
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Independent Goods
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Movie theaters charge lower prices to see a movie in the afternoon than in the evening because there is an:
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Elastic demand to see movies in the afternoon
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If demand for farm crops is inelastic, a good harvest will cause farm revenues to:
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Decrease because of a percentage fall in price greater than the percentage increase in quantity sold
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Airlines charge business travelers more than leisure travelers because there is a more:
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Inelastic demand for business travel
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If an increase in the supply of a product in the market results in a decrease in price, but no change in the quantity demanded, then:
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The price elasticity of demand is zero
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Refer to the above graph. If the price decreases from P3 to P2, then the total revenue will lose area:
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B + E, but it will gain area H + I
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Elasticity of supply will increase when:
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It becomes easier to substitute one factor of production for another in a manufacturing process.
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The price-elasticity of demand is always negative because of:
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Law of Demand
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Refer to the above data. Over which price range is the demand elastic?
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$14-$16
