Q&A Hero

Q: Howard buys 5 suits a year when he earns $70,000. When his income increases to $200,000, he buys 15 suits a year. From the midpoint method, his income elasticity of demand for suits isa. 1.04. b. 0.96. c. -1.04.d. -0.96.e. 0.08.

Q: Shawna wins the lottery and her income increases by 60 percent. She used to buy 10 pints of cottage cheese per month and now she buys 12 pints. Her income elasticity of demand for cottage cheese is ________, making it a(n) ________ good.a. 3; luxury b. 3.59; normal c. 0.33; necessityd. 0.28; inferiore. - 0.33; inferior

Q: When her income falls from $50,000 to $20,000, Arianna increases her monthly purchase of hamburger from 20 pounds to 35 pounds. From the midpoint method, Ariannas income elasticity of demand for hamburgers isa. -1.57. b. - 0.63. c. 0.54.d. - 0.85.e. 1.57.

Q: A firm knows that Senecas income elasticity of demand for hair ties is 5; for Janelle, it is 0.2. A firm can reason that a hair tie is a(n) ________ good for Seneca while it is a(n) ________ good for Janelle.a. normal; inferior b. complement; substitute c. necessity; luxuryd. inferior; normale. luxury; necessity

Q: A shopping mall owner is given a list of income elasticity of demand values. Which one represents a necessity?a. - 5 b. - 0.5 c. 0d. 5e. 0.5

Q: If the income elasticity of demand for laptops is 3.5, you know that laptops are a(n) ________ good.a. substitute b. inferior c. luxuryd. necessitye. complement

Q: Used car dealers find that their sales rise in a recession. We can be certain that consumers view used cars asa. necessities. b. normal goods. c. luxuries.d. substitutes.e. inferior.

Q: When incomes fall by 20 percent, quantity demanded of specialty baked goods falls by 50 percent. Specialty baked goods are a. inferior goods. b. necessities. c. substitutes for mass-produced bread. d. luxuries. e. complements to butter.

Q: If the income elasticity of demand is -3, the good will be a(n) ________ good.a. complement b. substitute c. necessityd. inferiore. luxury

Q: If the income elasticity of demand is 0.5, the good will be a(n) ________ good.a. complement b. substitute c. necessityd. inferiore. luxury

Q: Income elasticity of demand for professional haircuts is found to be 1.7. This service is a a. normal good and necessity good. b. luxury good but not a normal good. c. necessity good but not a normal good. d. substitute good. e. normal good and a luxury good.

Q: The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________. a. quantity demanded; price of a related good b. quantity demanded; income c. demand; price of good d. quantity demanded; price of a good e. income; quantity demanded

Q: Super Economy Brand products have an income elasticity of -1.4. Thus, these are ________ goods.a. necessity b. inferior c. luxuryd. normale. complementary

Q: The responsiveness of demand to changes in income while holding the goods relative price constant isa. slope of the demand curve. b. price elasticity of supply. c. cross-price elasticity.d. price elasticity of demand.e. income elasticity of demand.

Q: Income elasticity of demand is defined as a. the change in price divided by change in income. b. the change in demand divided by the change in income. c. the change in demand divided by change in income. d. the percentage change in demand divided by percentage change in income. e. the percentage change in demand divided by percentage change in price.

Q: Income elasticity refers to a. percentage change in quantity demanded divided by the percentage change in price. b. movement down along a demand curve. c. movement up along a demand curve. d. horizontal shift of a demand curve. e. vertical shift of a demand curve.

Q: Refer to the accompanying table. The price elasticity of demand of erasers is ________ when the price is lowered from $1.50 to $1.00. Sellers of erasers will ________ their total revenue from this price change.Price of ErasersQuantity Demandedof ErasersQuantity Demanded of Pencils$0.501012$1.00 811$1.50 710$2.00 6 9$2.50 5 8a. perfectly elastic; not change b. elastic; raise c. elastic; lowerhd. inelastic; lowere. inelastic; raise

Q: Winged Treasures is a specialty store that sells butterfly ornaments. The owner wants to increase her total revenue and knows that the price elasticity of demand for her product is -0.4. What should she do to her price? a. lower it by a relatively large amount b. leave it unchanged and use another way to increase sales c. decrease it to zero d. raise it by any amount e. lower it by a relatively small amount

Q: While there are many pizza places in Kutztown, Pappys Pizza is known for its distinctive deep-dish pizza with an almost pie-like crust, whereas Mommas Pizza is comparable to many other restaurants. Pappys is likely to find that it can ________ prices to increase total revenue, and Mommas must ________ prices to increase total revenue.a. raise; lower b. lower; raise c. raise; raised. lower; lowere. raise; not change

Q: The local National Hockey League (NHL) team decides to lower its ticket prices in order to attract more fans. It is hoping that the a. price elasticity of demand is perfectly inelastic. b. price decrease matters more than the quantity increase to total revenue. c. quantity increase matters more than the price decrease to total revenue. d. price elasticity of demand is unitary elastic. e. price elasticity of demand is perfectly elastic.

Q: When Heavenly Cookies prices its sugar cookies at $1.00, it sells 75 cookies. It lowers the price to $0.50 and sells 200 cookies. Its total revenue ________ because the price elasticity of demand for sugar cookies is ________.a. rose; elastic b. rose; inelastic c. fell; elasticd. fell; inelastice. stayed the same; unitary elastic

Q: Pepsi vendors who raise their price at professional sporting events increase total revenue because the price elasticity of demand is ________. When they raise their prices at gas stations, they decrease total revenue because the price elasticity of demand is ________.a. elastic; inelastic b. unitary elastic; elastic c. elastic; elasticd. inelastic; elastice. elastic; unitary elastic

Q: Use the following scenario to answer the following questions: Dairy Wishes, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.A local merchant raises the price of his good and finds that his total revenues increase. The demand for this good isa. inelastic. .b. elastic. c. relatively price sensitive.d. perfectly elastice. unitary elastic.

Q: The city of Huntsville is known for its wide variety of ice cream shops. What will happen if Nicolas Ice Cream Castle raises the price of its shakes? a. Demand will decrease by a greater proportion than the price. b. Demand will increase by a greater proportion than the price. c. The quantity demanded will decrease by a greater proportion than the price. d. The quantity demanded will increase by a greater proportion than the price. e. Demand will not change.

Q: A 15 percent increase in the price of cookies results in a 9 percent decrease in the quantity of cookies sold. The revenue received by cookie suppliers will ________ because the price elasticity of demand for cookies is ________.a. decrease; inelastic b. increase; elastic c. decrease; elasticd. not change; unitary elastice. increase; inelastic

Q: For which of the following products should sellers raise the price in order to increase total revenue from college students?a. blue hooded sweatshirts b. Gatorade c. concert ticketsd. textbookse. spaghetti sauce

Q: Firms are indifferent to changing prices when the price elasticity of demand isa. inelastic. b. perfectly elastic. c. elastic.d. unitary elastic.e. perfectly inelastic.

Q: When Kelsey decreases her price of lipstick from $7 to $5, she finds that her sales increase from 6 to 7. She faces ________ demand for her product, and this price change will ________ her total revenue.a. elastic; raise b. inelastic; lower c. unitary elastic; not changed. perfectly elastic; raisee. perfectly inelastic; lower

Q: When the price elasticity of demand is - 0.66, a decrease in price willa. lead to no changes in total revenue. b. increase total revenue. c. reduce total revenue.d. decrease the quantity.e. lead to no changes in quantity.

Q: How can a firm increase total revenue? a. when demand is elastic and price decreases b. when demand is elastic and price increases c. when demand is unitary elastic and price increases d. when demand is unitary elastic and price decreases e. when demand is inelastic and price decreases

Q: How can a firm increase total revenue? a. when demand is inelastic and the price decreases b. when demand is inelastic and the price increases c. when demand is elastic and the price increases d. when demand is unitary elastic and the price decreases e. when demand is unitary elastic and the price increases

Q: When can a firm lower prices and still increase revenue? a. when the elasticity of demand is equal to unity b. when the demand curve is horizontal c. when the demand curve is vertical d. when the demand is inelastic e. when the demand is elastic

Q: When the total revenue is unchanged despite the change in price, demand isa. elastic. b. inelastic. c. unitary elastic.d. horizontal.e. vertical.

Q: When the total revenue and price both move in the same direction (are directly related), demand isa. elastic. b. inelastic. c. unitary elastic.d. horizontal.e. vertical.

Q: At higher prices, the price elasticity of demand is likely to be ________, whereas it is likely to be ________ at lower prices. a. perfectly elastic; perfectly inelastic b. elastic; inelastic c. inelastic; elastic d. perfectly inelastic; perfectly elastic e. unitary elastic; elastic

Q: A new car is typically considered to be a normal good. What would happen to the equilibrium price and quantity of new cars if there is a recession where many people lose their jobs? a. The equilibrium price would rise and the equilibrium price would fall as demand shifts to the left. b. The equilibrium price and quantity would both fall as demand shifts to the left. c. The equilibrium price and quantity would both rise as demand shifts to the right. d. The equilibrium price would fall and the equilibrium quantity would rise as demand shifts to the right. e. There would be no change to the equilibrium price or quantity.

Q: Top Ramen is a brand of noodles that is widely considered to be an inferior good with a high salt content. What would happen to the equilibrium price and equilibrium quantity of Top Ramen if income went up and the price of salt decreased? a. The equilibrium price will go up and equilibrium quantity will go up. b. The equilibrium price will go down and equilibrium quantity will be indeterminate. c. The equilibrium price will be indeterminate and equilibrium quantity will go up. d. The equilibrium price will go up and equilibrium quantity will be indeterminate. e. The equilibrium price will be indeterminate and equilibrium quantity will go down.

Q: In agriculture, a bumper crop refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat? a. The equilibrium price will go up and equilibrium quantity will go up. b. The equilibrium price will be indeterminate and equilibrium quantity will go up. c. The equilibrium price will go down and equilibrium quantity will be indeterminate. d. The equilibrium price will go up and equilibrium quantity will be indeterminate. e. The equilibrium price will be indeterminate and equilibrium quantity will go down.

Q: Shoes are considered to be a normal good. What would happen to the equilibrium price and equilibrium quantity of shoes if income increases and the cost of labor to produce shoes increases? a. The equilibrium price will go up and equilibrium quantity will go up. b. The equilibrium price will be indeterminate and equilibrium quantity will go up. c. The equilibrium price will go down and equilibrium quantity will be indeterminate. d. The equilibrium price will go up and equilibrium quantity will be indeterminate. e. The equilibrium price will be indeterminate and equilibrium quantity will go down.

Q: Assume that the price of rubber increased at the same time that Michael Jordan, arguably the best NBA basketball player of all time, became famous. What do you expect to happen to the equilibrium price and equilibrium quantity of the basketball shoes that are promoted by Michael Jordan? a. Equilibrium price will go up and equilibrium quantity will go down. b. Equilibrium price will go up and equilibrium quantity will go up. c. Equilibrium price will go down and equilibrium quantity will be indeterminate. d. Equilibrium price will go down and equilibrium quantity will go up. e. Equilibrium price will go up and equilibrium quantity will be indeterminate.

Q: What happens to the equilibrium price and equilibrium quantity of a good if both the producers and the consumers of that good expect its price to be higher in the future? a. The equilibrium price will go up and equilibrium quantity will go up. b. The equilibrium price will go down and equilibrium quantity will be indeterminate. c. The equilibrium price will be indeterminate and equilibrium quantity will go up. d. The equilibrium price will go up and equilibrium quantity will be indeterminate. e. The equilibrium price will be indeterminate and equilibrium quantity will go down.

Q: When supply shifts right and demand shifts left, a. the equilibrium price always rises. b. the equilibrium price always falls. c. the equilibrium quantity always falls. d. the equilibrium quantity always rises. e. the equilibrium price is indeterminate.

Q: When supply shifts left and demand shifts right, a. the equilibrium price always rises. b. the equilibrium price always falls. c. the equilibrium quantity always falls. d. the equilibrium quantity always rises. e. the equilibrium price is indeterminate.

Q: The change in equilibrium shown in the accompanying figure would be explained by a(n) ________ in the price of an input and a(n) ________ in the price of a ________.a. increase; increase; complement b. decrease; increase; complement c. decrease; increase; substituted. increase; decrease; complemente. increase; increase; substitute

Q: Many consumer items eventually go out of style, and because fewer people want these items, demand for them drops. When this happens, we usually see production of these items stop. What happens to the equilibrium price and equilibrium quantity in a market like this? a. The equilibrium price goes up and equilibrium quantity goes up. b. The equilibrium price is indeterminate and equilibrium quantity goes up. c. The equilibrium price goes down and equilibrium quantity is indeterminate. d. The equilibrium price is indeterminate and equilibrium quantity goes down. e. The equilibrium price goes up and equilibrium quantity is indeterminate.

Q: According to a supply and demand model for apples, if the average household income decreases at the same time 10 apple orchards go out of business, one would expect the equilibrium a. price of apples to increase and the equilibrium quantity of apples in the market to decrease. b. price of apples to be indeterminate and the equilibrium quantity of apples in the market to increase. c. quantity of apples in the market to be indeterminate and the equilibrium price of apples to increase. d. quantity of apples in the market to decrease and the equilibrium price of apples to stay the same. e. quantity of apples in the market to decrease and the equilibrium price of apples to be indeterminate.

Q: What would happen to the equilibrium price and quantity for the market for cigarettes if the government increased the tax and a scientific study came out confirming that smoking cigarettes increased the rate of heart disease? a. Equilibrium price will be indeterminate and equilibrium quantity will go down. b. Equilibrium price will go up and equilibrium quantity will go up. c. Equilibrium price will go down and equilibrium quantity will be indeterminate. d. Equilibrium price will be indeterminate and equilibrium quantity will go up. e. Equilibrium price will go up and equilibrium quantity will be indeterminate.

Q: When both supply and demand decrease, the equilibrium price ________ and equilibrium quantity ________.a. increases; increases b. is indeterminate; increases c. decreases; is indeterminated. increases; is indeterminatee. is indeterminate; decreases

Q: When people move to an area of the world that was previously unpopulated, we expect more consumers and more producers to spring up in that area. What would we expect to happen to the price and quantity in the markets where this happens? a. The equilibrium price will go up and the equilibrium quantity will go up. b. The equilibrium price will go down and equilibrium quantity will be indeterminate. c. The equilibrium price will be indeterminate and equilibrium quantity will go up. d. The equilibrium price will go up and equilibrium quantity will be indeterminate. e. The equilibrium price will be indeterminate and equilibrium quantity will go down.

Q: What would we expect to happen to the price of bagels if the price of flour decreased and the price of cream cheese decreased? a. The equilibrium price of bagels will be indeterminate and the equilibrium quantity will go up. b. The equilibrium price will go up and the equilibrium quantity will go up. c. The equilibrium price will go down and the equilibrium quantity will be indeterminate. d. The equilibrium price will be indeterminate and the equilibrium quantity will go down. e. The equilibrium price will go up and the equilibrium quantity will be indeterminate.

Q: The government offers numerous educational subsidies through grants and low-cost equipment to schools. They also provide a lot of incentives to go to school. Because of this, we expect that the equilibrium price of education will ________ and the equilibrium quantity of students will ________.a. be indeterminate; go up b. go up; go upc. go down; be indeterminated. be indeterminate; go downe. go up; be indeterminate

Q: In one year, 15 bowling alleys opened in California. During that same year, ESPN started broadcasting professional bowling on TV, which sparked more interest in the sport. What would we expect to happen to the price and quantity of a game of bowling in California during that year? a. Equilibrium price will be indeterminate and equilibrium quantity will go down. b. Equilibrium price will go up and equilibrium quantity will go up. c. Equilibrium price will go down and equilibrium quantity will be indeterminate. d. Equilibrium price will be indeterminate and equilibrium quantity will go up. e. Equilibrium price will go up and equilibrium quantity will be indeterminate.

Q: Spam is considered an inferior good. What would happen to the equilibrium price and quantity of Spam if income decreased and more firms started producing Spam? a. Equilibrium price will go up and equilibrium quantity will go down. b. Equilibrium price will go up and equilibrium quantity will go up. c. Equilibrium price will go down and equilibrium quantity will be indeterminate. d. Equilibrium price will be indeterminate and equilibrium quantity will go up. e. Equilibrium price will go up and equilibrium quantity will be indeterminate.

Q: When both supply and demand shift to the right, equilibriuma. price always rises. b. price always falls.c. quantity always falls.d. quantity always rises.e. quantity is indeterminate.

Q: The change in an equilibrium value is sometimes indeterminate due to the fact that a. it is possible for demand to increase or decrease more than supply increases or decreases. b. demand always shifts less than supply. c. supply always shifts less than demand. d. both supply and demand may not change. e. both supply and demand may increase or decrease by equal amounts.

Q: When both curves shift a. equilibrium price is always indeterminate. b. equilibrium quantity is always indeterminate. c. equilibrium price and equilibrium quantity are indeterminate. d. equilibrium price or equilibrium quantity is indeterminate, but we cant predict which one. e. neither equilibrium price nor equilibrium quantity is indeterminate.

Q: When both supply and demand shift to the left, the equilibriuma. price always rises.b. price always falls. c. quantity always falls.d. quantity always rises.e. quantity is indeterminate.

Q: If the price and quantity for an inferior good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?a. $10 and 4 units b. $10 and 8 unitsc. $6 and 4 unitsd. $6 and 8 unitse. $10 and 2 units

Q: During the winter months, many elderly people leave their homes in northern New York and travel south to Florida or Arizona. What would we expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York? a. They would both increase. b. They would both decrease. c. One would increase and one would decrease, but we dont know which would do what. d. The price would increase and the quantity would decrease. e. The price would decrease and the quantity would increase.

Q: If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?a. $10 and 4 units b. $10 and 8 unitsc. $6 and 4 unitsd. $6 and 8 unitse. $10 and 2 units

Q: A twofold change is when a. income goes up and then it goes down. b. the equilibrium price of both a complement and a substitute changes. c. supply and demand both shift. d. equilibrium price and equilibrium quantity both change. e. some input costs go up and some go down.

Q: Which of the following scenarios best describes the change in the equilibrium shown in the accompanying graph?a. firms entering the market b. firms leaving the market c. buyers entering the marketd. buyers leaving the markete. an input cost decreasing

Q: With no barriers to entry or exit and when firms in a market are operating at a loss, we can expect other firms to exit, causing the ________ curve to shift to the ________ and making the equilibrium price ________ and the equilibrium quantity ________.a. demand; right; increase; increase b. demand; left; decrease; decrease c. supply; right; decrease; increased. supply; left; increase; increasee. supply; left; increase; decrease

Q: Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the supply curve will a. shift to the right, causing the equilibrium price to decrease. b. remain the same, but the equilibrium price will increase. c. remain the same, but the equilibrium price will decrease. d. shift to the right, causing the equilibrium price to increase. e. shift to the left, causing the equilibrium price to increase.

Q: Oil is a main component in the manufacture of plastic bags. If the price of oil were to increase, the price of plastics bags would ________ and the quantity would ________.a. increase; increase b. increase; decrease c. decrease; increased. decrease; decreasee. increase; stay the same

Q: When firms in a market expect the price of their products to rise, the supply curve of their goods ________, causing the equilibrium price to ________. a. decreases; rise b. decreases; fall c. increases; fall d. increases; rise e. increases; rise and the equilibrium quantity to fall

Q: Taxes cause the equilibrium price of a good toa. increase. b. decrease. c. remain the same.d. go up only for producers.e. go down only for consumers.

Q: Refer to the accompanying figure. What event would cause the supply curve to shift out?a. Consumers earn higher incomes.b. Consumers earn lower incomes.c. The price of an input increased.d. Firms entered the market.e. Firms expected the price to rise in the future.

Q: According to the supply and demand model, when the cotton gin was invented, if all else was held constant, we would expect the equilibrium price of cotton to ________ and the equilibrium quantity of cotton to ________.a. increase; increase b. increase; decrease c. decrease; increased. decrease; decreasee. remain the same; increase

Q: The market for footballs is perfectly competitive. If all else is held constant and the price of leather decreases, we would expect that the equilibrium quantity of footballs would ________ and the equilibrium price would ________.a. fall; rise b. rise; fall c. fall; falld. rise; risee. fall; remain constant

Q: What would happen to the equilibrium price and quantity of shirts if the price of cotton decreases and all else is held constant? a. The price falls and the quantity rises. b. The price rises and the quantity falls. c. The price falls and the quantity falls. d. The price rises and the quantity rises. e. The price falls and the quantity remains constant.

Q: Sabrina decided to start selling lemonade on her street. The other kids in the neighborhood noticed that Sabrina was making a lot of money selling lemonade. These kids decided to open their own lemonade stand. When they opened their own lemonade stand, the equilibrium price ________ and the equilibrium quantity ________.a. increased; decreased b. decreased; increased c. increased; increasedd. decreased; decreasede. stayed the same; stayed the same

Q: When a hurricane rips through Florida, the price of oranges rises because the a. demand curve shifts to the left. b. supply curve shifts to the right. c. demand curve shifts to the right. d. supply curve shifts to the left. e. supply and demand curves both shift to the left.

Q: The difference between a tax and a subsidy is that when the government places a tax on a good, it ________ the equilibrium price and ________ the equilibrium quantity, whereas when the government places a subsidy on a good, it ________ the equilibrium price and ________ the equilibrium quantity. a. increases; decreases; decreases; increases b. increases; increases; decreases; decreases c. decreases; decreases; increases; increases d. decreases; increases; increases; decreases e. increases; does not change; does not change; increases

Q: A technological advancement for Good A will shift the ________ curve of Good A to the ________, making the equilibrium price ________.a. demand; left; decrease b. supply; right; increase c. demand; right; increased. supply; left; increasee. supply; right; decrease

Q: When supply shifts to the right and demand stays constant, the equilibrium price ________ and the equilibrium quantity ________.a. increases; decreasesb. increases; increases c. decreases; decreasesd. decreases; increasese. stays the same; increases

Q: Wine and cheese are complement goods because they are consumed together. What would we expect to happen to the equilibrium quantity of cheese if the price of wine increased and all else is held constant? a. It would increase because of a supply shift. b. It would increase because of a demand shift. c. It would stay the same because of both a demand and a supply shift. d. It would decrease because of a supply shift. e. It would decrease because of a demand shift.

Q: Assume that the market for baseballs is in equilibrium. There is a sudden decrease in income throughout the economy. If all else is held constant, we would expect that if baseballs are a(n) ________ good, then the demand curve will shift to the ________, causing the equilibrium price and quantity to ________.a. inferior; left; fall b. normal; right; risec. inferior; right; falld. normal; left; fall e. normal; left; rise

Q: If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased? a. They would both increase. b. They would both decrease. c. One would increase and one would decrease, but we dont know which would do what. d. The price would increase and the quantity would decrease. e. The price would decrease and the quantity would increase.

Q: The equilibrium price of teddy bears is $5. A study comes out that says owning a teddy bear causes you to earn a lower salary. If all other factors are held constant, which of the following scenarios could happen? a. The price of teddy bears increases to $7 because of a supply shift. b. The price of teddy bears decreases to $4 because of a supply shift. c. The price of teddy bears decreases to $4 because of a demand shift. d. The price of teddy bears increases to $7 because of a demand shift. e. The price of teddy bears increases to $7 because of both a demand shift and a supply shift.