Question

In: Economics

1). During January of 2007, the average price of regular unleaded gasoline in Oakland, California increased...

1). During January of 2007, the average price of regular unleaded gasoline in Oakland, California increased 11.0 percent. If the price elasticity of demand for gasoline was 0.13, the price hike means that the quantity demanded decreased by.

  • 6.46 percent
  • 8.46 percent
  • 1.43 percent
  • 4.31 percent
  • 0.16 percent

2). If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded, the price elasticity of demand equals

  • 1.33.
  • 4.00.
  • 0.75.
  • 3.44.
  • None of the above answers are correct.

3). The price elasticity of demand is a measure of

  • The equilibrium price of a product.
  • Buyers’ responsiveness to changes in the price of a product.
  • Whether a product is a substitute or a complement.
  • How much a change in demand affects the equilibrium price.
  • The amount of a product purchased when income increases.

4). If the price of a scooter increases by 20 percent and the quantity supplied of scooters increases by 30 percent, then the price elasticity of supply is

  • 0.66.
  • 0.20.
  • 1.5.
  • .30.

5). Suppose the New Orleans Saints lowers ticket prices by 13 percent and as a result the quantity of tickets demanded increases by 21 percent. This response means that the price elasticity of demand for Saints tickets is

  • Elastic.
  • Perfectly elastic.
  • Perfectly inelastic.
  • Inelastic.
  • Unit elastic.

6). Total revenue equals

  • Price.
  • Profit – cost.
  • Quantity sold -cost
  • Cost x price.
  • Price x quantity sold.

7). Suppose the current price of barley is $7 per bushel and at that price 100,000 bushels are demanded. If the price of barley rises 14% and quantity demanded decreases by 23% what is the price elasticity of demand for barley?

  • 0.61.
  • 1.64.
  • 0.14.
  • 0.23.

8).

A minimum wage is an example of a

  • Price ceiling.
  • Price floor.
  • Market wage.

10). If the demand for insulin is inelastic, an increase in insulin prices leads to

  • Less total revenue for insulin makers.
  • Total revenue probably changes but we need more information about the change in total expenditures on insulin to determine if the total revenue rises, falls, or stays the same.
  • First a decrease, then an increase in total revenue for insulin makers.
  • More total revenue for insulin makers.
  • No change in total revenue for insulin makers.

Solutions

Expert Solution

3. The price elasticity of demand is a measure of -

  • Buyers’ responsiveness to changes in the price of a product.

6. total revenue =

  • Profit – cost.

8. A minimum wage is an example of a - Price floor

A price floor is the lowest legal price a commodity can be sold at. Price floors are used by the government to prevent prices from being too low. The most common price floor is the minimum wage--the minimum price that can be payed for labor.

10. If the demand for insulin is inelastic, an increase in insulin prices leads to -

  • More total revenue for insulin makers. because demand is inelastic. quantity demanded will not change with price. so when price increases and quantity does not decrease the total revenue definitely goes up

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