1. Starbucks cut the price of a small skinny latte from $2.25 to $1.75. Daily sales of small skinny lattes increased from 3750 per day to 4250 per day. Using the arc elasticity formula, which of the following is the best estimate of the price elasticity of demand?

Select one:

A.-2

B.-0.75

C.-0.5

D.-0.2

2. Just in time for Valentine's Day, flower prices have decreased by 20% and output has increased by 15%. Which of the following is the best explanation for these price and output adjustments?

Select one:

a.Income has decreased

b.An increase in Valentine's Day advertisements

c.More new florist shops are opening up

d.Higher wages for flower pickers

3. Many adults consider beer and bourbon to be substitutes. Bourbon must be stored in oak barrels for four years before bottling. Forest fires have reduced the supply of oak trees used to make barrels, so the price of bourbon is likely to increase. What will happen to the beer market in the short run?

Select one:

a.Price and output will decrease

b.Price increases and output decreases

c.Price and output increase

d.Price decreases output increases

4. Spicy fried chicken sandwiches have become more popular recently. In response, more restaurants have added these sandwiches to their menu, Popeyes and Bojangles have opened more stores and local restauranteur Ashley Christensen has started her own chain BB's Crispy Chicken. At the same time many people living in the area have had an increase in overall income due to the boom in the economy. What do these two facts imply about the future price and output of spicy fried chicken sandwiches in the short run?

Select one:

a. Output will increase but prices may go up or down

b. Output will decrease but prices may go up or down

c. Prices will increase but output will go up or down

d. Prices will decrease but output will go up or down

5. Demand for the latest model of Peloton increased significantly because of the new health and fitness features. The price of a Peloton has increased by 15 percent while the quantity of bikes sold have decreased by 10 percent. This tells us that

Select one:

a. Elasticity of Demand is -0.67%

b. Elasticity of Supply is 0.67%

c.Elasticity of Demand is -1.5%

d.Elasticity of Supply is 1.5%