Exam 7: Consumer Choice and Elasticity

As the share of healthcare expenditures paid for by third parties has grown, both healthcare prices and total expenditures have increased rapidly. Is this surprising?

If the income elasticity of demand for a good is negative, this implies that

If the quantity of cookies purchased decreases by 30 percent as the result of a 15 percent increase in the price of oranges, the absolute value of the price elasticity of demand for cookies is

Compared to the long run, consumers typically ____ to price changes in the short run.

A recent study on enrollment at a liberal arts college concluded that demand elasticity is 0.65. The administration is considering a tuition increase to help balance the budget. The revenue-maximizing decision is to

The price of soccer balls increases from $35 to $40, and as a result, the quantity demanded decreases from 250 to 200. Over this price range,

If the price of grapes increases, total expenditures on grapes will decline if

As third-party payments and government expenditures on healthcare increased following the passage of Medicare and Medicaid,

All things equal, the price elasticity of supply

Consider a consumer who purchases two goods, X and Y. If the price of good Y falls, then the substitution effect by itself will

If the demand for flashlights is highly inelastic, this indicates that

Figure 7-14 -Refer to Figure 7-14. Which supply curve represents perfectly inelastic supply?

If an increase in the excise tax imposed on cigarettes pushes the price per pack up by 20 percent, and the quantity sold declines by 8 percent as a result, the price elasticity of demand for cigarettes is equal to

Figure 7-2 -Figure 7-2 depicts a demand curve with a price elasticity that is

Diminishing marginal utility means that

If a 10 percent rise in price leads to a reduction in quantity demanded of more than 10 percent,

As the period for firms to expand output is lengthened, the elasticity of the market supply curve will

A question on an economics exam asks: What happens in the market for margarine when income rises? Allison, an excellent student, shows the demand for margarine decreasing. Is she necessarily wrong? Why or why not?

An increase in the consumption of a good resulting from a reduction in price that makes the good cheaper in relation to other goods is called the

Figure 7-8 -For a price increase from $10 to $11, the price elasticity of the demand curve depicted in Figure 7-8 is