Home / Questions / Consider the segment of a demand curve along which all price elasticities of demand are
Consider the segment of a demand curve along which all price elasticities of demand are
less than 1. A decrease in price anywhere along that segment
a.shifts that segment of the demand curve to the right
b.increases total revenue
c.decreases total revenue
d.shifts that segment of the demand curve to the left
e.raises the price elasticity of demand
82. The bus company in Detroit found that when it reduced its price in order to get more
people to use the bus—and more people did—the bus company’s total revenue still
remained the same. Why did they get this surprising result?
a.The demand curve was horizontal, reflecting a price elasticity of zero.
b.The demand curve was vertical, reflecting a price elasticity of zero.
c.The demand curve shifted to the right.
d.The price elasticity within the range of price-before-the-cut and price-after-the-cut
was unit elastic.
e.The price cut was insufficient. A deeper cut would have increased total revenue.
83. It is Valentine’s Day and Fred is desperately searching all over town for a dozen roses to
give to Diane. “I’ll pay anything for a dozen roses,” he says. Whether he really means it
or not, the statement implies that his price elasticity of demand for roses is
a.infinite
b.negative
c.one
d.greater than one
e.zero
84. The long-run price elasticity of demand for a good is usually larger than its short-run
price elasticity because
a.as the saying goes, “out of sight, out of mind”
b.more goods are demanded in the long run than in the short run
c.people have more time to find substitute goods
d.incomes tend to rise over time
e.supply curves shift outward over time
85. The best guess is that the cross elasticity between Rolaids and Tums, the two leading
antacids in the country, is
a.negative
b.positive
c.zero
d.one
e.infinite
86. You would expect the cross elasticity between tennis racquets and tennis balls to be
a.negative
b.positive
c.zero
d.one
e.infinite
87. If the cross elasticity between two goods, X and Y, is positive, then we know they are
a.substitute goods
b.complementary goods
c.unrelated goods
d.inferior goods
e.normal goods
88. Suppose we have two pairs of substitute goods. The first are very close substitutes, such
as Coke and Pepsi, while the others are less close, such as Coke and iced tea. We would
expect the cross elasticity of the closer pair to be
a.positive while the less close pair to be negative
b.negative while the less close pair to be positive
c.one while the less close pair to be zero
d.the smaller of the two
e.the larger of the two
89. When the price of bread increases by 3 percent, the quantity demanded of crackers
increases by 2 percent. The cross elasticity of demand between crackers and bread is
a.0.67
b.1.5
c.2.5
d.3.2
e.5.0
90. Which of the following pairs best represents substitute goods?
a.hamburgers and hamburger rolls
b.hot dogs and hot dog rolls
c.veggie burgers and hamburger rolls
d.hot dogs and hamburger rolls
e.hamburgers and hot dogs
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