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Unformatted text preview: Quiz 3 (WK3) 1. A mass transit authority charges bus fares of $1.25 during morning rush hours but only $1.00 during late morning non-rush hours. Economists explain the fare difference by the fact that the demand for bus rides during the morning rush hours is __________ but during the late morning it is __________. (Points: 2) more elastic; more inelastic perfectly elastic; perfectly inelastic more inelastic; more elastic unitarily elastic; relatively inelastic 2. Suppose an increase of 10% in the price of steak reduces the consumption of steak by 30%. Such a price rise will induce households to spend (Points: 2) less of their income on steak more of their income on steak the same amount on steak as before more on products that are complementary with steak 3. If the quantity demanded of tea increases by 2% when the price of coffee increases by 8%, the cross-price elasticity of demand between tea and coffee is (Points: 2)-25 0.25-4 4 4. The government is considering placing a tax on cigarettes to raise revenue to finance health care benefits. One of the The government is considering placing a tax on cigarettes to raise revenue to finance health care benefits....
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- Spring '10