question

A measure of how responsive buyers are to price changes is the:

answer

price elasticity of demand

question

Suppose the percentage change in newspapers demanded for any price change is infinite. The absolute value of the elasticity of demand for newspapers is _____, and demand is _____.

answer

infinity, perfectly elastic

question

The percent change in insulin demanded for any price change is zero. The demand curve for insulin is _____, and the price elasticity of demand is _____.

answer

vertical, perfectly inelastic

question

Lyft cuts the price of a ride in New York City by 10%. Thereafter, the quantity of rides demanded rises by 25%. What is the price elasticity of demand for Lyft rides?

answer

2.5

question

The price of chicken breast rises from $3.50 per pound to $4.25 per pound. In response to this price change, the quantity demanded for chicken breast falls by 30%. What is the price elasticity of demand for chicken breast?

answer

1.4

question

Taking the absolute value of the cross-price elasticity of demand is incorrect because it would:

answer

remove the ability to tell whether the two products are substitutes or complements

question

The price of product A is cut by 50%. As a result, the quantity demanded of product B rises by 50%. The cross-price elasticity of demand between product A and product B is _____, and they are _____.

answer

-1, complements

question

The price of product C rises by 10%. As a result, the quantity demanded of product D rises by 20%. The cross-price elasticity of demand between product C and product D is _____, and they are _____.

answer

2, substitutes

question

Income elasticity of demand measures how responsive the:

answer

quantity demanded of a good is to changes in income

question

If income rises by 10% and the quantity demanded of an item rises by 20%, the income elasticity of demand for this item is:

answer

2

question

The price of a dozen eggs rises from $3 to $4.70. In response to this price change, quantity supplied increases from 100,000 dozen eggs to 127,000 dozen eggs. What is the approximate price elasticity of supply for eggs?

answer

0.48

question

The price of milk at the local grocery store rises by 25%, and the quantity of milk demanded falls by 10%. The absolute value of the price elasticity of demand for milk is _____, and demand is _____.

answer

0.4; inelastic

question

The price elasticity of demand for a good with a vertical demand curve is:

answer

perfectly inelastic

question

Suppose the price of gasoline rises. As time passes, people adjust to the higher price by searching for the alternatives. The demand for gasoline becomes:

answer

more elastic

question

The price of milk at the local grocery store is cut by 15%, and the quantity of milk demanded increases by 10% in response. What is the absolute value of the price elasticity of demand for milk?

answer

.67

question

When the absolute value of the price elasticity of demand is infinite, demand is:

answer

perfectly elastic

question

When the absolute value of the price elasticity of demand is greater than 1, demand is:

answer

elastic

question

Taking the absolute value of the income elasticity of demand is incorrect because it would:

answer

remove the ability to tell whether the product is an inferior good or a normal good.

question

The cross-price elasticity of demand measures how responsive the:

answer

demand for one good is to a change in the price of another good

question

If income rises by 20% and the quantity demanded of an item rises by 10%, the income elasticity of demand for this item is:

answer

.5

question

Mary loves avocados and must consume avocados every week, regardless of the price. Which of the following must be true?

answer

mary has an elastic demand for avocados

question

The price of a dozen eggs falls from $3 to $2.70. In response to this price change, the quantity supplied of eggs falls from 100,000 dozen eggs to 75,000 dozen eggs. What is the price elasticity of supply for eggs?

answer

2.7

question

You are given data on four products — toothpaste, shampoo, soap, and laundry detergent. The absolute value of the price elasticity of demand for toothpaste is 4. The absolute value of the price elasticity of demand for shampoo is 0.2. The absolute value of the price elasticity of demand for soap is 0.5. The absolute value of the price elasticity of demand for laundry detergent is 2. Which product has the most inelastic demand?

answer

shampoo

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