Exam 4: Market Efficiency and Market Failure

If the market for a product is narrowly defined,then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

For people who live near a bus route,a metro station,or a commuter rail line,public transportation provides a substitute to driving their own cars.So,for these people,the cross-price elasticity of demand between petrol and public transportation is

When demand is unit-elastic,a change in price causes total revenue to stay the same because

Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Since 1950 there has been a substantial increase in wheat production.The increase in production has led to a decrease in the price of wheat because of which of the following factors?

Shifts in the supply of oil have caused large changes in price since the 1970s because

What factors would make you more sensitive or less sensitive to price when purchasing petrol?

Which of the following statements is true?

Demand for a luxury item,such as a yacht,is likely to be

If a firm lowered the price of the product it sells and found that total revenue did not change,then the demand for its product is

The demand for most farm products is relatively inelastic.All else held constant,what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?

If a 5 per cent increase in income leads to a 10 per cent increase in quantity demanded for airline travel,then airline travel is

At a price of $100,Beachside Canoe Rentals rented 11 canoes.When it increased its rental price to $125,9 canoes were rented.Calculate the absolute value of the price elasticity of demand for canoe rentals,using the midpoint formula.

If the cross-price elasticity of demand between beer and wine is 0.31,then beer and wine are

Suppose a 4 per cent increase in income results in a 2 per cent decrease in the quantity demanded of a good.Calculate the income elasticity of demand for the good and determine what type of good it is.

If the demand for a product is elastic,the quantity demanded changes by a smaller percentage than the percentage change in price.

According to a study of the price elasticities of products sold in supermarkets,the price elasticity of demand for toothpaste is estimated at -0.45.Which of the following could explain why the price elasticity of demand for toothpaste is so low?

If the absolute value of the price elasticity of demand for DVD movies is 0.8,then the elasticity of demand for the DVD for the movie The Hangover should be

Suppose the demand curve for a product is represented by a typical downward-sloping curve.Now suppose the demand for this product decreases.Which of the following statements accurately predicts the resulting decrease in price?

The slope of a demand curve is not used to measure the price elasticity of demand because