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Elasticity & Price Elasticity Homework Flashcards | StudBud
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Elasticity & Price Elasticity Homework
Elasticity & Price Elasticity Homework
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Homework questions for Elasticity & Price Elasticity - Unit 2 - Microeconomics
Flashcards
14 cards
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Questions
14
Answers
1
Is the demand for cacao price elastic or price inelastic in this price range?
Elastic
Inelastic
2
Why is XED in that range for the previous example?
Butter and margarine are normal goods.
Butter and margarine are substitutes.
Butter and margarine are complementary goods.
Butter and margarine are both inferior goods.
3
Calculate the total revenue raised through the imposition of the $2 per pound Cacao tax.
$3,600
$1,200
$4,800
$8
4
Calculate the Price Elasticity of Supply for a price change from $7 to $6 per pound.
0
.37
1
1.25
5
Why producers of luxury/normal goods save some of the profits earned during an economic boom?
So they can afford to buy the stocks of competitors.
Demand will decrease during an economic downturn.
Governments tax luxury goods in an economic downturn.
Demand will increase for luxury goods. No need to save.
6
What is true of all expanding businesses as compared to stagnating businesses?
Both Answer 1 and Answer 2 are correct.
Elasticity of supply is higher in a competitive industry.
Elasticity of demand is lower for expanding businesses.
Neither Answer 1 or Answer 2 are correct.
7
At what price level is revenue greatest?
$9 per pound
$8 per pound
$6 per pound
$7 per pound
8
Why would Coca-Cola have a very low PED?
All of these are reasons.
No substitutes
Branding/Advertising
Habit
9
The cross-price elasticity of demand for butter & margarine should be in what range of values?
Negative
Positive
10
Why would the price elasticity of supply for Boeing airplanes probably be fairly low?
Absence of substitutes: how many airplane manufacturers?
Lack of consumer interest.
Because science.
It wouldn't be low. It would be higher.
11
At this point, which is more elastic with regards to price - demand or supply?
Neither - they are the same.
Demand
Supply
12
Which portion of the demand curve generally exhibits greater price elasticity?
Middle/Equilibrium Point
Top Left
Bottom Right
You can't tell on the graph!
13
The income elasticity of demand for falafel sandwiches should be in what range of values? Why?
Perfectly inelastic! Who doesn't love falafel?>?
0
<1, because it has inelastic demand
>1 elastic demand (I can always have a burger instead!)
14
Calculate the price elasticity of demand for a price change from $7 to $6 per pound.
1.25
.12
1
.23
