AssignmentIV

# AssignmentIV - ARE 201 Introduction to Agricultural...

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Spring 2008 Assignment IV (Chapter 5) Price (dollars per skirt) Quantity demanded (skirts per year) 20 30 35 25 1) Using the data in the table above, when the price of a skirt rises from \$20 to \$35, what is the price elasticity of demand? (Use the midpoint method.) A) 1.33 B) 0.33 C) 0.25 D) 1.00 E) 3.00 2) Using the data in the table above, the demand for skirts is A) unit elastic. B) perfectly inelastic. C) inelastic. D) indeterminate. E) elastic. 3) The extent to which the demand for a good changes when the price of a substitute or complement changes, other things remaining the same, is measured as the A) price elasticity of demand. B) price elasticity of supply. C) cross income elasticity of demand. D) cross elasticity of demand. E) income elasticity of demand. 4) The cross elasticity of demand for butter and margarine is likely to be A) negative because they are complements. B) negative because they are substitutes. C) positive because they are complements. D) positive because they are substitutes. E) positive because they are normal goods. 5) Suppose the price of a ticket to a Lenny Kravitz concert is \$41 and at that price, the quantity of tickets demanded is 17,000 per concert. Using the midpoint method of calculating percentage changes, if Mr. Kravitz raises the price to \$48 and the quantity demanded decreases to 16,000, the price elasticity of demand for his concert tickets is A) 15.73. B) 6.06. C) 0.39. D) 0.93 E) 1.00. 6) If a 10 percent increase in income leads to a 5 percent decrease in the demand for a good, the income elasticity of demand equals ____ and the good is ____ good. A) - 1/2; an inferior B) 2; a normal C) 1/2; a normal D) - 5; an inferior E) - 2; a normal 1

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7) The figure above shows the supply curve for a good with a A) perfectly inelastic supply. B) elastic supply. C) perfectly elastic supply. D) unit elastic supply. E) inelastic supply. 8) The fact that there is a very limited amount of land in Hong Kong means the supply of new apartments in Hong Kong is A) inelastic. B) elastic. C) limited by the demand. D) perfectly elastic. E) unit elastic. 9) One reason why the demand for gasoline is inelastic is because A) substitutes for gas abound. B) substitutes for gas are hard to find. C) gasoline is a luxury item. D) buses run on diesel fuel rather than gasoline. E) people have a long time to shop around for automobiles that use less gas. 10) If the price elasticity of demand for razors is 0.32, the demand for razors is A) elastic. B) perfectly inelastic. C) unit elastic. D) perfectly elastic. E) inelastic. 2
11) If a product is an inferior good, then its income elasticity of demand is A) positive. B) negative.

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AssignmentIV - ARE 201 Introduction to Agricultural...

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