Multiple choice questions.

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1.The price elasticity of demand is: a) the proportion of the percentage adjust in quantity demanded come the percentage change in price. b) the responsiveness that revenue come a adjust in quantity. C) the proportion of the readjust in quantity demanded split by the readjust in price. D) the solution of revenue come a readjust in price.

2.If demand is price elastic, then: a) a increase in price will certainly raise total revenue. B) a fall in price will certainly raise total revenue. c) a autumn in price will reduced the amount demanded. D) a rise in price won"t have any type of effect on full revenues.

3. Complementary products have: a) the very same elasticities the demand. B) really low price elasticities of demand. C) an adverse cross price elasticities of demand with respect to every other. d) positive revenue elasticities that demand.

4. The price elasticity of need generally often tends to be: a) smaller sized in the lengthy run 보다 in the short run. B) smaller in the quick run 보다 in the lengthy run. c) bigger in the quick run than in the long run. D) unrelated come the length of time.

5. If the price elasticity of supply of doodads is 0.60 and also the price increases by 3 percent, climate the quantity offered of doodads will rise by a) 0.60 percent. B) 0.20 percent c) 1.8 percent d) 18 percent.

6. Expect we understand that the price elasticity of need of good X is equal to -1.2. Then, if the price will rise by 5%, we have the right to predict v certainty the a) amount demanded of that good will increase. B) the revenue that the firm creating that an excellent will increase by 6%. C) the revenue the the firm developing that good will to decrease by 6%. D) the amount demanded of that an excellent will decrease by 6%. e) nobody of the above.

7. A 10% rise in the price that movie ticket in Westridge 8 leader to a 15% decrease in the number of tickets sold, describe the need for movie ticket in Westridge 8 is: a) elastic. b) inelastic. C) unit elastic. D) have the right to not tell from the info given.

8. If the cross-price elasticity between two products is 1.5, a) the two items are luxury goods. B) the two items are complements. C) the two products are substitutes. d) the two goods are common goods.

True/False/Uncertain. because that each of the complying with statements, say whether it is true, false, or uncertain and also explain her answer.

1. The is reasonable to intend the cross price elasticity of demand for golf clubs and golf balls to be positive.

Golf clubs and also golf balls are complementary goods. This way that, as the price the golf clubs boosts (a positive change), the consumption of golf balls reduce (a negative change). Overcome price elasticity of demand is same to the ratio of these changes and will it is in negative. The explain is false.

2. If the need is perfectly elastic, climate a change in the supply curve go not influence the equilibrium price.

True, since a perfectly elastic need curve is horizontal. Therefore, no issue what the transition is the equilibrium price will always remain the same. (See graph.)

3. The need curve because that autos is more elastic than the need curve for Fords.

False. A Ford have the right to be substituted by a different model. It is not as straightforward to uncover a substitute because that a vehicle in general. The more substitutes a good has, the an ext elastic is the demand for the good. Therefore, demand for Fords is much more elastic. 4. Intend you own a "Here comes the Sun" tanning salon and also the demand curve for your services is downward sloping. Further, intend that a new tanning salon referred to as "Sunny Delight" opens two blocks away from her salon. Tell even if it is the following three statements are true, false or uncertain and also explain your answer.

a. The need curve for your solutions shifts come the right. This new salon is a substitute for her services. After ~ it has actually appeared, your consumer have an ext choice, and some of them will begin using the new salon. For this reason the demand for your services will decrease, or change to the left. The explain is false.

b. The need for your services becomes an ext elastic. One of the factors determining the price elasticity of demand for the great is the variety of substitutes. Much more substitutes - more elastic demand. The explain is true.

c. The cross-price elasticity of the need for your solutions with respect to the price charged by "Sunny Delight" is negative. This two items (services) are substitutes. The cross-price elasticity that substitutes is positive, because as the price of one of them increases, the need for (and therefore the intake of) the various other one increases, too. The declare is false.

Short answer Question. 5. At first Hans Johnson was the only consumer in the sector for "Casa de Econ" beer, produced by a tiny local brewery. As soon as the price that "Casa de Econ" six-pack varies between $10 and $20, the price elasticity the his individual need is same to negative 1. Currently imagine the Hans has actually been cloned 4 times, and also now we have actually 5 similar consumers in the market for "Casa de Econ". What will take place to the price elasticity the market need in the price range given above? will the demand become an ext price elastic, much less price elastic, or will elasticity stay the same? describe your answer.

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Since elasticity encounters relative changes, it doesn"t issue how plenty of consumers we have in the sector as lengthy as every one of them space same. (If the quantity demanded because that each the them alters by 50%, that would mean the quantity demanded in the whole market will adjust by 50%, too.) therefore the price elasticity of demand will remain the same.