A Firm Can Sell as Much as It Wants at a Constant Price. Demand Is Thus:

Multiple choice questions.
1.The price elasticity of need is:
a) the ratio of the percentage change in quantity demanded to the per centum modify in price.
b) the responsiveness of revenue to a change in quantity.
c) the ratio of the modify in quantity demanded divided by the change in price.
d) the response of acquirement to a alter in price.

2.If demand is toll elastic, so:
a) a rise in price will raise total revenue.
b) a fall in toll volition raise total revenue.
c) a autumn in toll will lower the quantity demanded.
d) a rise in price won't have whatever effect on total revenues.

three. Complementary appurtenances have:
a) the aforementioned elasticities of need.
b) very low cost elasticities of need.
c) negative cross price elasticities of demand with respect to each other.
d) positive income elasticities of demand.

4. The price elasticity of demand more often than not tends to be:
a) smaller in the long run than in the short run.
b) smaller in the short run than in the long run.
c) larger in the brusque run than in the long run.
d) unrelated to the length of time.

5. If the price elasticity of supply of doodads is 0.sixty and the cost increases by three percent, then the quantity supplied of doodads will rise past
a) 0.60 percent.
b) 0.20 percent
c) i.8 per centum
d) 18 percent.

6. Suppose we know that the price elasticity of demand of adept 10 is equal to -1.2. Then, if its price volition increase past 5%, we tin predict with certainty that
a) quantity demanded of that skilful will increase.
b) the revenue of the firm producing that expert will increase past six%.
c) the revenue of the firm producing that skillful volition subtract past half dozen%.
d) the quantity demanded of that good will decrease by 6%.
e) None of the to a higher place.

seven. A 10% increase in the toll of movie ticket in Westridge 8 leads to a 15% subtract in the number of tickets sold, indicating the demand for movie ticket in Westridge 8 is:
a) rubberband.
b) inelastic.
c) unit elastic.
d) Can not tell from the information given.

8. If the cross-price elasticity between two commodities is ane.5,
a) the two goods are luxury goods.
b) the 2 goods are complements.
c) the two appurtenances are substitutes.
d) the ii appurtenances are normal goods.

True/False/Uncertain.
For each of the following statements, say whether it is true, false, or uncertain and explain your respond.

1. Information technology is reasonable to expect the cantankerous price elasticity of demand for golf clubs and golf assurance to exist positive.

Golf clubs and golf balls are complementary goods. This means that, as the price of golf game clubs increases (a positive change), the consumption of golf balls decreases (a negative alter). Cantankerous price elasticity of demand is equal to the ratio of these changes and will be negative. The statement is false.

ii. If the demand is perfectly elastic, then a shift in the supply curve does not touch on the equilibrium price.

True, considering a perfectly elastic need curve is horizontal. Therefore, no thing what the shift is the equilibrium price will always remain the aforementioned. (Meet graph.)

iii. The demand curve for autos is more than elastic than the need curve for Fords.

Faux. A Ford can be substituted past a dissimilar model. It is non as easy to find a substitute for a motorcar in general. The more than substitutes a expert has, the more elastic is the demand for that good. Therefore, need for Fords is more than elastic.

four. Suppose yous own a "Here Comes the Sun" tanning salon and the demand curve for your services is downward sloping. Further, suppose that a new tanning salon called "Sunny Delight" opens two blocks away from your salon. Tell whether the following three statements are true, faux or uncertain and explain your reply.

a. The demand curve for your services shifts to the right.
This new salon is a substitute for your services. Afterward it has appeared, your consumers have more choice, and some of them will kickoff using the new salon. Then the need for your services will decrease, or shift to the left.
The argument is imitation.

b. The need for your services becomes more rubberband.
One of the factors determining the price elasticity of demand for the skilful is the number of substitutes. More substitutes - more rubberband demand.
The statement is true.

c. The cantankerous-price elasticity of the need for your services with respect to the toll charged past "Sunny Please" is negative.
These two goods (services) are substitutes. The cross-cost elasticity of substitutes is positive, since equally the cost of one of them increases, the demand for (and therefore the consumption of) the other ane increases, too.
The argument is faux.

Short Answer Question.
five. Initially Hans Johnson was the only consumer in the market place for "Casa de Econ" beer, produced by a small local brewery. When the price of "Casa de Econ" half-dozen-pack varies between $ten and $20, the price elasticity of his private need is equal to negative one. Now imagine that Hans has been cloned 4 times, and now we take 5 identical consumers in the market for "Casa de Econ". What will happen to the price elasticity of market place demand in the price range given above? Will the demand become more toll elastic, less price elastic, or will elasticity stay the same? Explain your answer.

Since elasticity deals with relative changes, it doesn't thing how many consumers we accept in the market as long every bit all of them are aforementioned. (If the quantity demanded for each of them changes past l%, that would mean the quantity demanded in the unabridged market will modify by fifty%, too.) So the price elasticity of demand will stay the same.

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Source: https://www.washburn.edu/sobu/dnizovtsev/200P04ans.html

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