Exam 7: Consumer Choice and Elasticity

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

Assuming that bus travel is an inferior good, a decrease in consumer income, other things being equal, will cause

The difference between the amount consumers would be willing to pay and the amount they actually pay for a good is called

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

If a 20 percent reduction in the price of airline tickets between Chicago and New York leads to a 50 percent increase in the quantity of tickets purchased, the price elasticity of demand for the tickets is

If Sarah's income rises by 20 percent, and, as a result, she purchases 40 percent more designer clothing, her income elasticity for designer clothing is

Ceteris paribus , an increase in the price of a good will cause the

Figure 7-1 Figure 7-1 depicts a demand curve with a price elasticity that is

The price elasticity of demand for a product tends to be large (more elastic) when

If the price of tickets to Disney World increases 10 percent, and as a result, attendance falls by 15 percent, the demand for the tickets is

When the price elasticity of demand is large, then

Suppose the Pleasant Corporation cuts the price of its American Girl dolls by 10 percent, and as a result, the quantity of the dolls sold increases by 25 percent. This indicates that the price elasticity of demand for the dolls over this range is

If Mr. Smith thinks the last dollar spent on shirts yields less satisfaction than the last dollar spent on cola, and Smith is a utility-maximizing consumer, he should

If taking an airplane from Pittsburgh to Miami cost $600 and takes 5 hours, while taking a bus would cost $150 and takes 50 hours, the minimum value of your time that would make it worthwhile to fly would be

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

Suppose Microsoft announces it is cutting the prices of some of its software titles (mainly games) by 25 percent. Assuming that Microsoft is seeking to increase revenues, it must believe that the elasticity of demand for these products is

If the price of hamburger increases, the substitution effect works to

Which of the following describes a situation in which demand must be inelastic?

A recent increase in the supply of oranges caused the price to drop from $5 to $3 per bushel, and quantity demanded to rise from 10,000 bushels to 25,000 bushels. This indicates that the price elasticity of demand for oranges in this price range is

If the demand for a product increases as the result of an increase in income, it can be concluded that the