ECO101H1 Lecture Notes - Toronto Transit Commission, Royal Ontario Museum, Demand Curve
ECO101H1 Full Course Notes
Related textbook solutions
a. When demand is inelastic, an increase in price causes quantity demanded to ____ and TR to ____.
b. When demand is elastic, a decrease in price causes quantity demanded to ____ and TR to ____.
c. When demand is unitary elastic, an increase in price causes quantity demanded to ___ and TR to ____.
d. If the price falls and total revenue stays the same, demand must be _____.
e. If price rises and total revenue falls, demand must be _____.
1. The concept of price elasticity of demand measures:
a. the slope of the demand curve.
b. the number of buyers in a market.
c. the extent to which the demand curve shifts as the result of a price decline.
d. the sensitiveness of quantities demanded to price changes.
2. When the percentage change in price is less than the resulting percentage change in quantity demanded:
a. demand is elastic.
b. demand is inelastic.
c. demand is unit elastic.
d. none of the above.
3. The elasticity of demand:
a. will be the same at each price-quantity combination on a stable demand curve.
b. tends to be elastic in high-price ranges and inelastic in low-price ranges.
c. tends to be inelastic in high-price ranges and elastic in low-price ranges.
d. is infinitely large for a perfectly inelastic demand curve.
4. Suppose that as the price of Y falls from $2.00 to $1.80 the quantity of Y demanded increases from 110 to 121. It can be concluded that the price elasticity of demand is: _______.
5. Total revenue rises as the price of a good increases if price elasticity of demand is:
a. unitary elastic
b. perfectly inelastic.
6. The demand for such products as salt, bread, and electricity tend to be:
a. relatively price elastic.
b. relatively price inelastic.
c. of unit price elasticity.
d. perfectly price elastic.
1. Grand TV Manufacturer wants to increase the quantity of TVs it sells by 8%. If the price elasticity of demand is 4, the manufacturer must:
a. decrease price by 1.5%.
b. increase price by 1.5%.
c. increase price by 2.0%.
d. decrease price by 2.0%.
2. Suppose that an Italian ice cream firm is facing a linear demand curve and that the current price for the Italian ice cream is set at a point where the price elasticity is 0.7. If the firm decreases the product price,
a. the demand becomes less inelastic, and total revenue increases.
b. the demand becomes more inelastic, and total revenue decreases.
c. the demand becomes more inelastic, and total revenue increases.
d. the demand becomes less inelastic, and total revenue decreases.
3. Suppose that in a month, the price of movie rentals decreases from $3.25 to $3. At the same time, the quantity of movie rentals demanded increases from 100 to 120. The price elasticity of demand for movie rentals (calculated using the midpoint formula) is:
d. unitary elastic.
4. The price elasticity of demand for color printers is 1.6, and you would like to see the quantity demanded of color printers increase by 32%. Then the percentage change in price should be:
5. The price of apple increases from $1 to $1.10. At the same time, the quantity of apples demanded decreases from 100 to 90. The price elasticity of demand for apples (calculated using the initial value formula) is: