Answer To: I need solutions for all the questions in the assignment
Soma answered on Feb 09 2021
Sheet1
HW5 CHAPTER 6: Elasticity HOMEWORK PROBLEMS
Don't forget your name!!
READ THE INSTRUCTIONS CAREFULLY
Note: Be careful when you enter the letter answers. Any extra character in the cell, including a blank space, will cause your answer to not match the key and Excel will enter a zero as the score for that question.
Enter your LETTER answers HERE
↓
1 b
2 a
3 b
4 c
5 c
6 c
7 d
8 a
9 b
10 d
11 d
12 a
13 b
14 b
15 b
16 c
17 b
18 c
19 b
20 d
21 a
22 a
23 a
24 d
25 a
26 a
27 c
28 d
29 c
30 d
31 d
32 b
33 c
34 a
35 b
36 d
37 a
38 d
39 c
40 a
41 b
42 c
43 b
44 d
45 b
46 c
47 b
1 Price elasticity of demand measures as the ratio of
a the change in quantity demanded to the change in quantity supplied.
b the percentage change in quantity demanded to percentage change in price.
c the change in price to the change in quantity demanded.
d the proportional change in price to proportional change in quantity demanded.
2 What situation would make the demand for new cars relatively more price elastic?
a There is a plentiful supply of used cars.
b Car buyers are prosperous, and they are seeking luxury cars.
c Auto manufacturers have a difficult time hiring skilled workers.
d Auto manufacturers find it easy to hire skilled workers.
New cars and used cars are substitutes.
3 When the transit authority raises subway fares by 10%, ridership falls by 5%. What is the price elasticity of demand for subway rides?
a 0.5 Demand is price elastic.
b 0.5 Demand is price inelastic.
c 2.0 Demand is price elastic.
d 2.0 Demand is price inelastic.
4 Before the price increased from $3.00 to $3.50 per gallon, a gasoline station sold 2,000 gallons of gasoline per day at price of $3.00 per gallon. Gasoline sales decreased to 1,900 gallons a day when the price increased to $3.50. The coefficient of price elasticity of demand for gasoline, E, is,
a 0.33. This indicates that the demand for gasoline is elastic.
b 0.20. This indicates that the demand for gasoline is elastic.
c 0.33. This indicates that the demand for gasoline is inelastic.
d 0.20. This indicates that the demand for gasoline is inelastic.
5 The following table shows the weekly demand schedule for ice cream in Bardstown. Using the midpoint method, what is the price elasticity of demand between the price of $2.50 and $3.00 per cone?
Quantity
Price demanded
0.00 1600
0.50 1400
1.00 1200
1.50 1000
2.00 800
2.50 600
3.00 400
3.50 200
4.00 0
a 1.8 Demand is elastic
b 1.8 Demand is inelastic
c 2.2 Demand is elastic
d 2.2 Demand is inelastic
6 Given the demand schedule for ice cream in the table above, as the price per cone rises from $2.50 to $3.00, the quantity effect is ______, the price effect is ______, and TR ______ (increases, decreases) from $______ to $______.
Draw the demand curve and the price and quantities lines in the chart area below.
a $500 -$200 increases $1,200 $1,500
b -$200 $500 increases $1,200 $1,500
c -$500 $200 decreases $1,500 $1,200
d $200 -$500 decreases $1,500 $1,200
7 Which of the following statements is correct?
a When the price of a good increases, total revenue tends to decrease due to the price effect and tends to increase due to the quantity effect.
b The cross-price elasticity of demand measures the extent to which the quantity effect outweighs the price effect.
c A price increase always increases total revenue, because the seller collects a higher price on each unit sold.
d When the price of a good increases, total revenue tends to increase due to the price effect and tends to decrease due to the quantity effect.
8 The demand for enrollment at RTC University is price inelastic. When the board of trustees faces a budget shortfall and needs to increase tuition revenue, they should
a raise tuition because the increase in tuition will more than offset the fall in enrollment and total revenue will rise.
b lower the tuition because the increase in enrollment will more than offset the lower tuition and total revenue will rise.
c raise tuition because enrollment will increase along with the tuition.
d raise tuition because enrollment will not change and the higher tuition per student will increase total revenue.
9 During a drought, the price elasticity of demand for water is less than one. During a flood, the price elasticity of demand for water is greater than one. This means that
a the quantity of water people choose to consume is independent of the price.
b the demand for water is inelastic during a drought and elastic during a flood.
c the demand for water is elastic during a drought and inelastic during a flood.
d the demand curve for water cannot have a constant slope.
10 When demand is perfectly elastic,
a the demand curve is vertical.
b suppliers do not respond to price changes.
c consumers do not respond to price changes.
d the demand curve is horizontal.
11 When the price of insulin rises, even diabetics who do not have insurance and pay the full cost of their medication do not cut back on how much they demand. We describe this type of demand as
a perfectly price elastic.
b elastic.
c unit-elastic.
d perfectly price inelastic.
12 Since for most people eating in restaurants is a luxury while eating at home is a necessity, the demand for food eaten at home
a is less sensitive to changes in price than the demand for food eaten in a restaurant.
b is more sensitive to changes in price than the demand for food eaten in a restaurant.
c cannot be compared with the demand for food eaten in restaurant in terms of price elasticity of demand.
d has a higher price elasticity of demand than the demand for food eaten in a...