Chapter 6 ECON

question

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:
answer

Demand for the shirts is inelastic
question

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:
answer

1.60
question

If a 5 percent cut in the price of a product causes the quantity demanded to rise by 10 percent, the demand is:
answer

Elastic
question

Refer to the above graphs. Which graph shows the immediate market period for Supply?
answer

Graph C
question

What is the most likely effect of the development of DVDs, rental movies, and online movie streaming on the movie theater industry?
answer

Increased price elasticity of demanded for movie theater tickets
question

Refer to the graph above. Which demand curve is perfectly inelastic?
answer

D5
question

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:
answer

Increase the price of the software
question

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:
answer

+2.0
question

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:
answer

Independent Goods
question

Movie theaters charge lower prices to see a movie in the afternoon than in the evening because there is an:
answer

Elastic demand to see movies in the afternoon
question

If demand for farm crops is inelastic, a good harvest will cause farm revenues to:
answer

Decrease because of a percentage fall in price greater than the percentage increase in quantity sold
question

Airlines charge business travelers more than leisure travelers because there is a more:
answer

Inelastic demand for business travel
question

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:
answer

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:
answer

B + E, but it will gain area H + I
question

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.
question

The price-elasticity of demand is always negative because of:
answer

Law of Demand
question

Refer to the above data. Over which price range is the demand elastic?
answer

$14-$16

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