QUESTION 1

If the demand for widgets is elastic, with respect to price, a widget seller can increase his revenue by raising the price of widgets. True or False

QUESTION 2

Suppose the price of zercs fell from $10.00 to $8.00, causing the quantity of zercs demanded to rise from 6,000 to 8,400 units. Use the midpoints formula to compute the price elasticity of demand.

QUESTION 3

In the above question, the total revenue from the sale of zercs: A. stayed the same, despite the price decrease B. went up as a result of the price decrease C. went down as a result of the price decrease. D. cannot be determined from the information given.

QUESTION 4 Demand curve DA is more inelastic than demand curve DB True or False

QUESTION 5

In each of the following cases, indicate the item with the more inelastic (i.e., less elastic) demand: Enter the number 1 or 2, as instructed. You may wish to refer to the lecture notes entitled Determinants of Price Elasticity of Demand in the COURSE CONTENTS section.

a. The for gasoline (enter 1) vs. the demand for champagne (enter 2).

b. The demand for rides on the subway for one week (enter 1) vs. the demand for rides on the subway over a period of one year (enter 2).

c. The McConnell, et al textbooks (10th edition) at the college bookstore (enter 1) vs. the demand for pulp fiction books at the newsstand, grocery store, drug store, etc. (enter 2).

d. The demand for Morton's salt (enter 1) vs. the demand for salt (enter 2) .

e. The demand for a house (enter 1) vs. the demand for a piece of chewing gum (enter 2). 10 points Save Answer

QUESTION 6

On which items would the government be more inclined to place a tax - those with an elastic demand or those with an inelastic demand? (Careful on the spelling)