Liberty University ECON 213 Quiz 7 Complete Solutions Correct Answers Key

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Liberty University ECON 213Quiz 7Complete Solutions Correct Answers KeyTwo versionsQuestion 1 If the price elasticity of supply is 1.5, we know that supply is:Question 2 Refer to the accompanying table. When the price drops from $5 to $3, price elasticityof demand for sushi (using the midpoint method) at an income of $30,000 is:Question 3 If the income elasticity of demand for noodles is–2 and the percentage change in thequantity consumed is 5%, what is the percentage change in income?Question 4 At higher prices, the price elasticity of demand is likely to be __________, whereas it islikely to be __________ at lower prices.Question 5 If the crossprice elasticity between Good A and Good B is–1.5 and the percentagechange in quantity demanded of Good B is 15%, what is the percentage change in the price ofGood A?Question 6 Super Economy Brand products have an income elasticity of–1.4. Thus, these are__________ goods.Question 7 To keep the percentage change in quantity demanded equally proportional to thepercentage change in price when the prices rise by 5%, a consumer would need to ________quantity demanded by ________.Question 8 If the percentage change in the quantity consumed of pizza is 8% and the percentagechange in income is 2%, what is the income elasticity of demand for pizza?Question 9 Demand for which of the following goods/services is likely to be the LEAST elastic in aMinnesota winter?Question 10 The income elasticity of demand for a good measures the responsiveness of ________to a change in ________.Question11Whilethere are manypizzaplacesinCurtisville,Pappy’sPizzaisknownforitsdistinctivedeepdishpizzawithanalmostpielikecrust,whereasMomma’sPizzaPizzazziscomparable to manyother restaurants.Pappy’sis likelyto findthatit can ________ pricestoincrease total revenue, and Mommas must ________ prices to increase total revenue.Question 12 The initial price of picture frames is $6 and suppliers offer 20 frames. When the price

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falls to $4, suppliers offer only 10. The price elasticity of supply is:Question 13 A producerknows that the price elasticity for his product is–0.5. He wantstoincrease quantity demanded by 30%. By what percentage does he need to change the price?Question 14 A 15% increase in the price of cookies results in a 9% decrease in the quantity ofcookies sold. The revenue received by cookie suppliers will ________ because the price elasticity ofdemand for cookies is ________.Question 15 If the owner of Sally’s Salty Treats finds that, in the long run, she can trade one typeof input for another, the price elasticity of supply is:Question 16 Which one of the following pairs of goods is likely to have a negative crosspriceelasticity of demand?Question 17 Winged Wonders is a specialty store that sells butterfly ornaments. The owner wantsto increase her total revenue and knows that the price elasticity of demand for her product is–0.4.What should she do to her price?Question 18 We would expect to see a positive crossprice elasticity between:Question 19 The Sunny Softball league found that, when it changed its ticket prices from $10 to$5, there was a more than proportional but not infinite increase in attendance. The price elasticityof demand is:Question 20 If the crossprice elasticity of demand between Good A and Good B is 3, the price ofGood B increases, and the price elasticity of demand for Good B is inelastic, we can expect to seea(n) ________ change in the quantity demanded for Good A.Version 2Question 1 Over time, the price elasticity of supply for sunglasses will become more:Question 2 Demand is almost always more price elastic in the long run because:Question 3 If the income elasticity of demand is 1.2, the good will be a(n):Question 4 Winged Wonders is a specialty store that sells butterfly ornaments. The owner wantsto increase her total revenue and knows that the price elasticity of demand for her product is–

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0.4. What should she do to her price?Question 5 If a business finds that demand for its good is very price elastic, it knows that:Question6WhiletherearemanypizzaplacesinCurtisville,Pappy’sPizzaisknownforitsdistinctivedeepdishpizzawithanalmostpielikecrust,whereasMomma’sPizzaPizzazziscomparable to manyother restaurants.Pappy’sis likelyto findthatit can ________ pricestoincrease total revenue, and Mommas must ________ prices to increase total revenue.Question 7 When the price of erasers increases from $1.50 to $2.50, the quantity demanded ofpencils is unchanged. The crossprice elasticity of demand between erasers and pencils is ________because erasers and pencils ________.Question 8 If the owner of Sally’s Salty Treats finds that, in the long run, she can trade one type ofinput for another, the price elasticity of supply is:Question 9 Refer to the information in the accompanying table. Without any calculations, youknow that sushi is a(n):Question 10 If the crossprice elasticity of demand between Good A and Good B is–2, the price ofGood B increases, and the price elasticity of demand for Good B is elastic, we can expect to see a________ change in the quantity demanded for Good A.Question 11 Which one of the following pairs of goods is likely to have a positive crosspriceelasticity of demand?Question 12 Use the following scenario to answer the questions that follow: Dairy Dream, a localice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raisesthe price to increase its revenues and finds that no one buys ice cream sandwiches anymore. Theowners raised the price because they believed that the demand for ice cream sandwiches is:Question13Theintroduction of newgamingsystems thatcancompeteeffectively withtheNintendo console will make the demand for the Nintendo console become:Question 14 A local merchant raises the price of his good and finds that his total revenuesincrease. The demand for this good is:Question 15 Refer to the accompanying table. When the price drops from $5 to $3, price elasticityof demand for sushi (using the midpoint method) at an income of $30,000 is:

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