Quiz_elasticityquiz.pdf

# Quiz_elasticityquiz.pdf - Elasticity Quiz Score 1.Suppose a...

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Elasticity Quiz Score: 1. Suppose a firm is selling a product at a price on the inelastic portion of the demand line. This firm could increase revenue by A lowering the price, selling more units. B lowering the price, selling less units. C increasing the price, selling more units. D increasing the price, selling less units. 2. In terms of price elasticity of demand, which of the following goods do you think is the least elastic (most inelastic)? A New house B Electricity to power your home C A specific brand of breakfast cereal D New vehicle 3. Suppose that the price of candy bars increases by 100%. As a result of this, you decide to purchase 50% fewer candy bars. How would you describe your demand for candy bars? A Demand is elastic. B Demand is unit elastic. C Demand is inelastic. D Demand is perfectly inelastic. 4. Suppose a hotel manager raises the price of bottled water from \$3.00 to \$5.00 and then finds that consumption drops from 1,000 to 900 bottles per week. Is the price elasticity of demand for bottled water elastic or inelastic? Show your calculations.

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