ECP3704 Final Ch 2 Thru 6 Questions
And Answers
If bthe bincome belasticity bfor blobster bis b0.4, ba b40% bincrease bin bincome bwill blead bto
ba:
-10% bdrop bin bdemand bfor blobster
-16% bincrease bin bdemand bfor blobster
-20% bincrease bin bdemand bfor blobster
-4% bincrease bin bdemand bfor blobster b- bcorrect banswers✔✔16% bincrease bin
bdemand bfor blobster
If bthe bprice bof bpork bchops bfalls bfrom b$8 bto b$6, band bthis bleads bto ban bincrease bin
bdemand bfor bapple bsauce bfrom b100 bto b140 bjars, bwhat bis bthe bcross bprice belasticity
bof bapple bsauce band bpork bchops bat ba bpork bchop bprice bof b$6 b(Hint byou bwill bneed
bto buse bthe bArc bElasticity bformula)
a. b1.7
b b2.71
c b.42
d. b-.86 b- bcorrect banswers✔✔-1.17
If bthe bprice bincrease bfrom b$5 bto b$7 bcauses bquantity bdemanded bto bfall bfrom b150
bto b100, bwhat bis bthe babsolute bvalue bof bthe bown-price belasticity bat ba bprice bof b$7?
-.57
-1.75
-.02
-1.2 b- bcorrect banswers✔✔1.2
The bdemand bfor bgood bX bhas bbeen bestimated bby bQ^xd b= b12-3Px+4Py. bSupposed
bthat bgood bX bsells bat b$2 bper bunit band bgood by bsells bfor b$1 bper bunit. bCalculate bthe
bown bprice belasticity bwhen bthe bprice bof bx bincreases bto b$3. b
a. b-17/15
b. b-15/17
c. b-3/85
d. b-85/3
e. b1-
,f. b7 b- bcorrect banswers✔✔-15/17
You bare bthe bmanager bof ba bsupermarket, band bknow bthat bthe bincome belasticity bof
bpeanut bbutter bis bexactly b-0.7. bDue bto bthe brecession, byou bexpect bincomes bto bdrop
bby b15% bnext byear. bHow bshould byou badjust byour bpurchase bof bpeanut bbutter?
- bBuy b10.5% bmore bpeanut bbutter
- bBuy b2.14% bmore bpeanut bbutter
- bBuy b6.2% bless bpeanut bbutter
- bBuy b9.8% bless bpeanut bbutter b- bcorrect banswers✔✔Buy b10.5% bmore bpeanut
bbutter
An bincome belasticity bless bthan bzero btells bus bthat bthe bgood bis:
- ba bnormal bgood
- ba bgiffen bgood
-an binferior bgood
-an binelastic bgood b- bcorrect banswers✔✔an binferior bgood
The belasticity bthat bmeasures bthe bresponsiveness bof bconsumer bdemand bto bchanges
bin bincome bis bthe:
-Income belasticity
-Own-price belasticity
-Cross-price belasticity
-Neither bthe bincome belasticity, bown-price belasticity bnor bthe bcross-price belasticty b-
bcorrect banswers✔✔Income belasticity
If bthe bcross-price belasticity bbetween bketchup band bhamburgers bis b-1.2, ba b4%
bincrease bin bthe bprice bof bketchup bwill blead bto ba b4.8%:
-drop bin bquantity bdemanded bof bketchup
-drop bin bquantity bdemanded bof bhamburgers
-Increase bin bquantity bdemanded bof bketchup
-Increase bin bquantity bdemanded bof bhamburgers b- bcorrect banswers✔✔drop bin
bquantity bdemanded bof bhamburgers
If bthe bcross-price belasticity bbetween bgood bA band bB bis bnegative, bwe bknow bthe
bgoods bare:
-inferior bgoods
-complements
-inelastic
-substitutes b- bcorrect banswers✔✔complements
Lemonade, ba bgood bwith bmany bclose bsubstitutes, bshould bhave ban bown-price
belasticity bthat bis:
-Unitary
-Relatively belastic
-Relatively binelastic
-Perfectly binelastic b- bcorrect banswers✔✔Relatively belastic
, Demand bis bmore binelastic bin bthe bshort-term bbecause bconsumers:
-Are bimpatient
-Have bno btime bto bfind bavailable bsubstitutes
-Are bpresent-oriented
-Are bneither bimpatient, bhave bnot btime bto bfind bavailable bsubstitutes bnor bare
bpresent-oriented b- bcorrect banswers✔✔Have bno btime bto bfind bavailable bsubstitutes
Which bof bthe bfollowing bfactors bwould bnot baffect bthe bown-price belasticity bof ba
bgood?
-Time
-Price bof ban binput
-Available bsubstitutes
-Expenditure bshare b- bcorrect banswers✔✔Price bof ban binput
If bthe babsolute bvalue bof bthe bown-price belasticity bof bsteak bis b0.4, ba bdecrease bin
bprice bwill blead bto:
- bA breduction bin btotal brevenue
-An bincrease bin btotal brevenue
-No bchange bin btotal brevenue
-None bof bthe bstatements bassociated bwith bthis bquestion bare bcorrect b- bcorrect
banswers✔✔A breduction bin btotal brevenue
The bdemand bcurve bfor ba bgood bis bhorizontal bwhen bit bis:
- bA bperfectly binelastic bgood
-A bunitary belastic bgood
-A bperfectly belastic bgood
-An binferior bgood b- bcorrect banswers✔✔A bperfectly belastic bgood
If bquantity bdemanded bfor bsneakers bfalls bby b10% bwhen bprice bincreases b25% bwe
bknow bthat bthe babsolute bvalue bof bthe bown-price belasticty bof bsneakers bis:
- b2.5
- b0.4
- b2.0
b- b0.27 b- bcorrect banswers✔✔0.4
The bown-price belasticity bof bdemand bfor bapples bis b-1.2. bIf bthe bprice bof bapples bfalls
bby b5%, bwhat bwill bhappen bto bthe bquantity bof bapples bdemanded?
-It bwill bincrease b5%
-It bwill bfall b4.3%
-It bwill bincrease b4.2%
-It bwill bincrease b6% b- bcorrect banswers✔✔It bwill bincrease b6%
The bquantity bconsumed bof ba bgood bis brelatively bunresponsive bto bchanges bin bprice
bwhenever bdemand bis:
-Elastic
And Answers
If bthe bincome belasticity bfor blobster bis b0.4, ba b40% bincrease bin bincome bwill blead bto
ba:
-10% bdrop bin bdemand bfor blobster
-16% bincrease bin bdemand bfor blobster
-20% bincrease bin bdemand bfor blobster
-4% bincrease bin bdemand bfor blobster b- bcorrect banswers✔✔16% bincrease bin
bdemand bfor blobster
If bthe bprice bof bpork bchops bfalls bfrom b$8 bto b$6, band bthis bleads bto ban bincrease bin
bdemand bfor bapple bsauce bfrom b100 bto b140 bjars, bwhat bis bthe bcross bprice belasticity
bof bapple bsauce band bpork bchops bat ba bpork bchop bprice bof b$6 b(Hint byou bwill bneed
bto buse bthe bArc bElasticity bformula)
a. b1.7
b b2.71
c b.42
d. b-.86 b- bcorrect banswers✔✔-1.17
If bthe bprice bincrease bfrom b$5 bto b$7 bcauses bquantity bdemanded bto bfall bfrom b150
bto b100, bwhat bis bthe babsolute bvalue bof bthe bown-price belasticity bat ba bprice bof b$7?
-.57
-1.75
-.02
-1.2 b- bcorrect banswers✔✔1.2
The bdemand bfor bgood bX bhas bbeen bestimated bby bQ^xd b= b12-3Px+4Py. bSupposed
bthat bgood bX bsells bat b$2 bper bunit band bgood by bsells bfor b$1 bper bunit. bCalculate bthe
bown bprice belasticity bwhen bthe bprice bof bx bincreases bto b$3. b
a. b-17/15
b. b-15/17
c. b-3/85
d. b-85/3
e. b1-
,f. b7 b- bcorrect banswers✔✔-15/17
You bare bthe bmanager bof ba bsupermarket, band bknow bthat bthe bincome belasticity bof
bpeanut bbutter bis bexactly b-0.7. bDue bto bthe brecession, byou bexpect bincomes bto bdrop
bby b15% bnext byear. bHow bshould byou badjust byour bpurchase bof bpeanut bbutter?
- bBuy b10.5% bmore bpeanut bbutter
- bBuy b2.14% bmore bpeanut bbutter
- bBuy b6.2% bless bpeanut bbutter
- bBuy b9.8% bless bpeanut bbutter b- bcorrect banswers✔✔Buy b10.5% bmore bpeanut
bbutter
An bincome belasticity bless bthan bzero btells bus bthat bthe bgood bis:
- ba bnormal bgood
- ba bgiffen bgood
-an binferior bgood
-an binelastic bgood b- bcorrect banswers✔✔an binferior bgood
The belasticity bthat bmeasures bthe bresponsiveness bof bconsumer bdemand bto bchanges
bin bincome bis bthe:
-Income belasticity
-Own-price belasticity
-Cross-price belasticity
-Neither bthe bincome belasticity, bown-price belasticity bnor bthe bcross-price belasticty b-
bcorrect banswers✔✔Income belasticity
If bthe bcross-price belasticity bbetween bketchup band bhamburgers bis b-1.2, ba b4%
bincrease bin bthe bprice bof bketchup bwill blead bto ba b4.8%:
-drop bin bquantity bdemanded bof bketchup
-drop bin bquantity bdemanded bof bhamburgers
-Increase bin bquantity bdemanded bof bketchup
-Increase bin bquantity bdemanded bof bhamburgers b- bcorrect banswers✔✔drop bin
bquantity bdemanded bof bhamburgers
If bthe bcross-price belasticity bbetween bgood bA band bB bis bnegative, bwe bknow bthe
bgoods bare:
-inferior bgoods
-complements
-inelastic
-substitutes b- bcorrect banswers✔✔complements
Lemonade, ba bgood bwith bmany bclose bsubstitutes, bshould bhave ban bown-price
belasticity bthat bis:
-Unitary
-Relatively belastic
-Relatively binelastic
-Perfectly binelastic b- bcorrect banswers✔✔Relatively belastic
, Demand bis bmore binelastic bin bthe bshort-term bbecause bconsumers:
-Are bimpatient
-Have bno btime bto bfind bavailable bsubstitutes
-Are bpresent-oriented
-Are bneither bimpatient, bhave bnot btime bto bfind bavailable bsubstitutes bnor bare
bpresent-oriented b- bcorrect banswers✔✔Have bno btime bto bfind bavailable bsubstitutes
Which bof bthe bfollowing bfactors bwould bnot baffect bthe bown-price belasticity bof ba
bgood?
-Time
-Price bof ban binput
-Available bsubstitutes
-Expenditure bshare b- bcorrect banswers✔✔Price bof ban binput
If bthe babsolute bvalue bof bthe bown-price belasticity bof bsteak bis b0.4, ba bdecrease bin
bprice bwill blead bto:
- bA breduction bin btotal brevenue
-An bincrease bin btotal brevenue
-No bchange bin btotal brevenue
-None bof bthe bstatements bassociated bwith bthis bquestion bare bcorrect b- bcorrect
banswers✔✔A breduction bin btotal brevenue
The bdemand bcurve bfor ba bgood bis bhorizontal bwhen bit bis:
- bA bperfectly binelastic bgood
-A bunitary belastic bgood
-A bperfectly belastic bgood
-An binferior bgood b- bcorrect banswers✔✔A bperfectly belastic bgood
If bquantity bdemanded bfor bsneakers bfalls bby b10% bwhen bprice bincreases b25% bwe
bknow bthat bthe babsolute bvalue bof bthe bown-price belasticty bof bsneakers bis:
- b2.5
- b0.4
- b2.0
b- b0.27 b- bcorrect banswers✔✔0.4
The bown-price belasticity bof bdemand bfor bapples bis b-1.2. bIf bthe bprice bof bapples bfalls
bby b5%, bwhat bwill bhappen bto bthe bquantity bof bapples bdemanded?
-It bwill bincrease b5%
-It bwill bfall b4.3%
-It bwill bincrease b4.2%
-It bwill bincrease b6% b- bcorrect banswers✔✔It bwill bincrease b6%
The bquantity bconsumed bof ba bgood bis brelatively bunresponsive bto bchanges bin bprice
bwhenever bdemand bis:
-Elastic
