If the Income Elasticity of Demand for Laptops Is 3.5

Multiple choice questions.
one.The cost elasticity of need is:
a) the ratio of the pct alter in quantity demanded to the percent change in price.
b) the responsiveness of revenue to a change in quantity.
c) the ratio of the change in quantity demanded divided by the change in price.
d) the response of revenue to a change in toll.

ii.If demand is cost elastic, and so:
a) a rise in price volition enhance total revenue.
b) a fall in price will raise total revenue.
c) a fall in toll volition lower the quantity demanded.
d) a ascent in price won't have any effect on full revenues.

3. Complementary goods have:
a) the aforementioned elasticities of need.
b) very depression price elasticities of demand.
c) negative cross price elasticities of need with respect to each other.
d) positive income elasticities of demand.

iv. The price elasticity of demand generally 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 curt run than in the long run.
d) unrelated to the length of time.

5. If the price elasticity of supply of doodads is 0.60 and the cost increases by iii percent, then the quantity supplied of doodads will rise by
a) 0.lx percentage.
b) 0.20 percent
c) ane.8 percent
d) 18 percent.

6. Suppose we know that the cost elasticity of demand of proficient X is equal to -1.2. Then, if its price will increase past 5%, we can predict with certainty that
a) quantity demanded of that good will increase.
b) the revenue of the firm producing that good will increase past 6%.
c) the revenue of the house producing that good will decrease past 6%.
d) the quantity demanded of that good will decrease past half-dozen%.
e) None of the above.

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

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

Truthful/False/Uncertain.
For each of the following statements, say whether information technology is true, false, or uncertain and explicate your answer.

1. It is reasonable to expect the cantankerous price elasticity of demand for golf clubs and golf balls to be positive.

Golf clubs and golf balls are complementary goods. This means that, as the toll of golf clubs increases (a positive change), the consumption of golf balls decreases (a negative modify). Cross price elasticity of need is equal to the ratio of these changes and volition be negative. The statement is false.

2. If the demand is perfectly elastic, so a shift in the supply curve does non affect the equilibrium price.

True, because a perfectly elastic demand bend is horizontal. Therefore, no matter what the shift is the equilibrium price will always remain the same. (See graph.)

3. The demand curve for autos is more rubberband than the demand curve for Fords.

False. A Ford tin exist substituted past a unlike model. Information technology is not as like shooting fish in a barrel to notice a substitute for a car in general. The more than substitutes a good has, the more elastic is the demand for that good. Therefore, need for Fords is more rubberband.

4. Suppose you own a "Here Comes the Sun" tanning salon and the need curve for your services is downward sloping. Further, suppose that a new tanning salon called "Sunny Delight" opens ii blocks abroad from your salon. Tell whether the following 3 statements are true, false or uncertain and explain your reply.

a. The need bend for your services shifts to the correct.
This new salon is a substitute for your services. Later on it has appeared, your consumers accept more choice, and some of them will kickoff using the new salon. And so the need for your services will decrease, or shift to the left.
The statement is imitation.

b. The demand for your services becomes more elastic.
One of the factors determining the cost elasticity of demand for the good is the number of substitutes. More substitutes - more elastic need.
The argument is true.

c. The cross-price elasticity of the demand for your services with respect to the cost charged by "Sunny Delight" is negative.
These two goods (services) are substitutes. The cross-price elasticity of substitutes is positive, since as the price of one of them increases, the demand for (and therefore the consumption of) the other one increases, also.
The statement is false.

Short Answer Question.
5. Initially Hans Johnson was the only consumer in the market place for "Casa de Econ" beer, produced past a small local brewery. When the toll of "Casa de Econ" six-pack varies between $10 and $xx, the price elasticity of his individual need is equal to negative 1. Now imagine that Hans has been cloned 4 times, and now we have 5 identical consumers in the market for "Casa de Econ". What will happen to the price elasticity of marketplace need in the cost range given above? Volition the demand become more than price elastic, less price elastic, or volition elasticity stay the same? Explicate your answer.

Since elasticity deals with relative changes, it doesn't matter how many consumers nosotros have in the market place as long as all of them are same. (If the quantity demanded for each of them changes by l%, that would mean the quantity demanded in the unabridged market place will change past 50%, too.) So the toll elasticity of need will stay the same.

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

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