Q&A Hero

Q: Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result, CineArts Videos experienced a 16 percent decline in its movie club membership. What is the value of the cross-price elasticity between the two movie club memberships? A) -1.6 B) -0.625 C) 0.625 D) 1.6

Q: If the cross-price elasticity of demand for computers and software is negative, this means the two goods are A) substitutes. B) complements. C) inferior. D) normal.

Q: Cross-price elasticity of demand is calculated as the A) percentage change in quantity demanded divided by percentage change in price of a good. B) percentage change in quantity demanded of one good divided by percentage change in price of a different good. C) percentage change in quantity sold divided by percentage change in buyers' incomes. D) percentage change in quantity supplied divided by percentage change in price of a good.

Q: Linesha, a college student working part-time receives a wage increase. An avid movie buff, she increased her purchases of Blu-ray discs and reduced her purchases of DVDs. Based on this information A) DVDs and Blu-ray discs are substitutes. B) Blu-ray discs are normal goods and DVDs are inferior goods. C) DVDs and Blu-ray discs are normal goods. D) the cross-price elasticity between DVDs and Blu-ray discs is negative.

Q: Using cross-sectional data from the two Housing Assistance Supply Experiment (HASE) sites--Brown County, Wisconsin, and St. Joseph County, Indiana, John Mulford of Rand Research estimates that the long-run "permanent" income elasticity of housing expenditures to be 0.45 for owners. Using this information, what is likely to happen to housing expenditures if the government increases income transfers to recipients in HASE sites? A) Housing expenditures will increase significantly. B) Housing expenditures in HASE sites significantly will fall as recipients moved out of these areas to higher-income areas. C) Housing expenditures will increase, but not significantly. D) Housing expenditures will decrease by a small amount.

Q: Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09. This means that A) an increase in the price of beer will increase the quantity demanded of beer and beer is a normal good. B) an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is a normal good. C) a decrease in the price of beer will lead to an increase in revenue for beer sellers and beer is an inferior good. D) an increase in the price of beer will lead to a decrease in the quantity demanded of beer and beer is a necessity.

Q: According to a study of the U.S. demand for alcoholic beverages, the price elasticity of demand for beer is -0.30. Which of the following could explain why the price elasticity of demand for beer is low? A) Beer is an inferior alcoholic beverage. B) More and more people are switching to wine and cocktails rather than beer. C) The price of beer is relatively low and for many people it is a habit forming product. D) There are only a few major suppliers of beer.

Q: Last year, Sefton purchased 60 pounds of potatoes to feed his family of five when his household income was $30,000. This year, his household income fell to $20,000 and Sefton purchased 80 pounds of potatoes. All else constant, Sefton's income elasticity of demand for potatoes is A) negative, so Sefton considers potatoes to be an inferior good. B) positive, so Sefton considers potatoes to be an inferior good. C) positive, so Sefton considers potatoes to be a normal good and a necessity. D) negative, so Sefton considers potatoes to be a normal good.

Q: If you expect the economy is going to boom and average income in the economy will rise in the foreseeable future, the type of firm that would be able to increase its sales if your expectations are met is A) one that sells an inferior good. B) one that sells a necessity good. C) one that sells a luxury good. D) one that sells a price inelastic good.

Q: Which of the following items is likely to have the highest income elasticity of demand? A) a bus ride B) a meal at Taco Bell C) a vacation home in the Swiss Alps D) a tank of gasoline

Q: Studies show that the income elasticity of demand for wine is approximately five. What does this mean? A) A 1 percent decrease in the price of wine leads to a 5 percent increase in wine consumption. B) A 1 percent increase in income leads to a 5 percent increase in wine consumption. C) A 5 percent increase in income leads to a 1 percent increase in wine consumption. D) Wine is a relatively elastic good.

Q: Calculate the income elasticity if an 8 percent increase in income leads to a 4 percent increase in quantity demanded for organic produce. A) -0.66 B) 0.5 C) 1.5 D) 2

Q: Income elasticity measures A) how a good's quantity demanded responds to change in the goods price. B) how a good's quantity demanded responds to change in the price of another good. C) how a good's quantity demanded responds to change in buyers' incomes. D) how a good's quantity demanded responds to producers' incomes.

Q: Suppose the governor of California has proposed increasing toll rates on California's toll roads, and has presented two possible scenarios to implement these increases. Following are projected data for the two scenarios for the California toll roads: Scenario 1: Toll rate in 2012: $10.00. Toll rate in 2016: $22.50 For every 100 cars using the toll roads in 2012, only 81.6 cars will use the toll roads in 2016. Scenario 2: Toll rate in 2012: $10.00. Toll rate in 2016: $17.50 For every 100 cars using the toll roads in 2012, only 96.2 cars will use the toll roads in 2016. a. Using the midpoint formula, calculate the price elasticity of demand for Scenario 1 and Scenario 2. b. Assume 10,000 cars use California toll roads every day in 2012. What would be the daily total revenue received for each scenario in 2012 and in 2016? c. Is demand under Scenario 1 and under Scenario 2 price elastic, inelastic, or unit elastic. Briefly explain. (For above questions, assume that nothing other than the toll change occurs during the time frame listed that would affect consumer demand.)

Q: Ali's Gyros operates near a college campus. Ali has been selling 120 gyros a day at $4.50 each and is considering a price cut. He estimates that he would be able to sell 200 gyros per day at $3.50 each. a. Calculate the price elasticity of demand using the midpoint formula. b. Calculate the change in revenue as a result of the price cut.

Q: The Mass Rapid Transit (MRT) System in Hong Kong has been running significant losses. Transport Ministry officials have argued over whether to raise fares to combat the losses. One argument against a fare increase is that it will aggravate traffic congestion on the streets during peak commuter hours. Suppose that the current fare is $4 and the government is considering raising it to $6. Officials estimate that this reduces the number of rides purchased from 10,000 to 8,000 per day. a. What is the estimated elasticity of demand for MRT rides? b. What does this elasticity of demand suggest to you about what will happen to total revenue earned by the transit system? c. Last year, the MRT system incurred a loss of $50,000 per day. Do you think the fare increase will resolve the deficit problem as well as Ministry officials anticipate? Explain.

Q: Suppose that at a price of $55, 100 units were sold while at a price of $33, 153 units were sold. Without calculating the price elasticity value, can you determine whether demand is elastic, unit-elastic, or inelastic? Explain your answer.

Q: You are the manager of a theater. At present the theater charges the same admission price of $8 to all customers, regardless of age. You propose a two-tier pricing scheme: $5 for children under the age of 12 and $10 for adults. You tell your supervisor that your proposal is likely to increase revenues. What must be true about the price elasticity of demand if your proposal is to achieve its goal of raising revenue? Explain your answer.

Q: Explain the relationship between price elasticity of demand and total revenue.

Q: Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1. Increasing ticket prices will increase the total revenue from ticket sales.

Q: If demand for a product is perfectly inelastic a change in price will not change total revenue.

Q: If the price elasticity of demand is unit-elastic, a 10 percent increase in price will result in a 10 percent increase in revenue.

Q: When Audrina raised the price of her home made cookies, her total revenue increased. This suggests that the demand for Audrina's cookies is elastic.

Q: If a firm's goal is to maximize revenue, it will price its product to correspond to the unit-elastic segment of its demand curve.

Q: Article Summary Based on resale prices for tickets for the 2013 Super Bowl in New Orleans, face-value prices for the most expensive tickets to the 2014 game are expected to more than double, with significant price increases for lesser-valued tickets as well. Evidence indicates that sports teams are more interested in maximizing attendance instead of ticket revenue, since greater attendance means more spending on items such as parking and concessions. Higher ticket prices in secondary markets seem to verify that teams are charging less than they could be if their goal was to maximize ticket revenue. Source: Patrick Rishe, "Super Bowl XLVIII Pricing: A Lesson In Demand Elasticity," Forbes, September 19, 2013. Refer to the Article Summary. How would sports teams know if they were operating on the elastic portion of the demand curve for tickets? A) If they increased ticket prices and the total revenue from ticket sales increased. B) If they increased ticket prices and the total revenue from ticket sales did not change. C) If they increased ticket prices and the total revenue from ticket sales decreased. D) If they decreased ticket prices and the total revenue from ticket sales did not change.

Q: Article Summary Based on resale prices for tickets for the 2013 Super Bowl in New Orleans, face-value prices for the most expensive tickets to the 2014 game are expected to more than double, with significant price increases for lesser-valued tickets as well. Evidence indicates that sports teams are more interested in maximizing attendance instead of ticket revenue, since greater attendance means more spending on items such as parking and concessions. Higher ticket prices in secondary markets seem to verify that teams are charging less than they could be if their goal was to maximize ticket revenue. Source: Patrick Rishe, "Super Bowl XLVIII Pricing: A Lesson In Demand Elasticity," Forbes, September 19, 2013. Refer to the Article Summary. The idea that sports teams could charge more for tickets and still increase revenue indicates that tickets are being priced in the ________ portion of their demand curve. A) elastic B) inelastic C) unit elastic D) perfectly elastic

Q: If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, then an increase in tolls will result in A) a decrease in total revenue. B) a decrease in non-toll road usage. C) an increase in total revenue. D) an increase in toll road usage.

Q: If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, demand for using the toll road must be A) inelastic. B) elastic. C) unit elastic. D) perfectly elastic.

Q: Which of the following correctly comments on the following statement? "The only way to increase the revenue from selling a product is to increase the product's price." A) It is not true. Revenue will increase as the price of the product increases only if demand is elastic. B) This statement is not true. Revenue will increase as the price of the product increases only if demand is inelastic. C) The statement is true. D) This statement is not true. Revenue will decrease as the price of the product increases because quantity demanded will fall.

Q: Which of the following statements is true? A) If the price of a good is lowered and total revenue decreases, demand is elastic. B) If the price of a good is raised and total revenue does not change, demand is perfectly elastic. C) If the price of a good is raised and total revenue increases, demand is inelastic. D) If the price of a good is lowered and total revenue increases, demand is inelastic.

Q: Suppose a decrease in the supply of paper results in an increase in revenue. This indicates that A) the demand for paper is inelastic. B) the demand for paper is elastic. C) the supply of paper is inelastic. D) the supply of paper is elastic.

Q: Suppose at the current price, the demand for copper is estimated at -3.14. What happens to sales revenue if the government imposes a price ceiling below the free market equilibrium price in the copper market? A) Sales revenue falls. B) Sales revenue rises. C) Sales revenue remains unchanged because copper is a necessity for most industries. D) It cannot be determined without information on prices.

Q: Suppose when Nablom's Bakery raised the price of its breads by 10 percent, the quantity demanded fell by 15 percent. What was the effect on sales revenue? A) Sales revenue increased. B) Sales revenue remained unchanged. C) Sales revenue decreased. D) It cannot be determined without information on prices.

Q: Assume that you own a small boutique hotel. In an attempt to raise revenue you reduce your rates by 20 percent. However, your revenue falls. What does this indicate about the demand for your boutique hotel rooms? A) Boutique hotel rooms are inferior goods. B) Demand is inelastic. C) The demand curve for your hotel rooms is vertical. D) Demand is elastic.

Q: Assume that the market for barley is in equilibrium and the demand for barley is inelastic. Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley. The drought will cause farm revenue to A) rise because there will be a shortage of barley. B) rise because the percentage decrease in quantity sold is less than the percentage increase in price. C) rise because the percentage increase in quantity sold is greater than the percentage increase in price. D) fall because of the decrease in the quantity of barley sold.

Q: In September 2012, the average price of gasoline in the United States was $3.91 per gallon, and consumers purchased nearly 5 percent less gasoline than they had during September 2011, when the average price of gasoline was $3.66 per gallon. Based on these figures, when the price of gasoline rose from $3.66 per gallon to $3.91 per gallon, total revenue A) increased. B) decreased. C) did not change. D) There is not enough information to determine what happened to total revenue.

Q: Figure 6-7 Refer to Figure 6-7. Between points a and b on the demand curve, demand is A) perfectly inelastic. B) unit-elastic. C) perfectly elastic. D) elastic.

Q: Along a downward sloping, linear demand curve, total revenue is the greatest A) where demand is normal. B) where demand is the most inelastic. C) where demand is the most elastic. D) where demand is unit-elastic.

Q: Opera Estate Girls' School is considering increasing its tuition to raise revenue. If the school believes that raising tuition will increase revenue A) it is assuming that the demand for attending the school is inelastic. B) it is assuming that the demand for attending the school is elastic. C) it is assuming that the demand for attending the school is unit-elastic. D) it is assuming that the demand for attending the school is perfectly elastic.

Q: Which of the following explains why a firm would be interested in the knowing the price elasticity of demand for a good it sells? A) The price elasticity of demand can be used to determine the impact of changes in income on quantity sold. B) Knowing the price elasticity of demand allows the firm to determine how the cost of producing additional units of the good will change. C) Knowing the price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total profit. D) The price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total revenue.

Q: Table 6-5Hourly Rental Rate (dollars)Quantity Demanded (hours)$60407532803010024Refer to Table 6-5. Katie Graham owns a kayak rental service in Santa Barbara. Table 6.3 below shows her estimated demand schedule for kayak rentals per week. She would like to increase her sales revenue by changing the price she charges for rentals. At present she charges $75. Based on the information in the table, KatieA) is not able to increase her revenue by changing her price because the demand for kayak rentals is unit-elastic.B) should lower her price to $60 to increase her revenue because the demand for kayak rentals is price elastic.C) should raise her price to $80 to increase her revenue because the demand for kayak rentals is price inelastic.D) should raise her price to earn the most revenue.

Q: If a firm raised its price and discovered that its total revenue fell, then the demand for its product is A) perfectly inelastic. B) relatively inelastic. C) perfectly elastic. D) relatively elastic.

Q: If demand is perfectly inelastic, the absolute value of the price elasticity coefficient is A) infinity. B) zero. C) more than one. D) equal to the absolute value of the slope of the demand curve.

Q: Which of the following statements is true? A) Whenever a firm raises its price its total revenue will increase. B) When a firm lowers its price its total revenue may either increase or decrease. C) Whenever a firm increases its quantity sold its revenue will increase. D) Total revenue will equal zero when the demand for a product is unit-elastic.

Q: Total revenue is equal to A) the amount of funds earned by a firm minus its costs of production. B) the total quantity sold of a product over a given period of time. C) the price of a product multiplied by the number of units of the product sold. D) the monetary value of the capital (for example, plant and equipment) a firm owns.

Q: An article in the Wall Street Journal noted the following: Instead of relying on a full-coach, round-trip unrestricted fare of about $2,000 between Cleveland and Los Angeles ...Continental [Airlines] since June has offered a $716 unrestricted fare in that market .... Through October, the test resulted in about the same revenue that Continental thinks it would have collected with its higher fare. Source: Scott McCartney, "Airlines Try Cutting Business Fares, Find They Don't Lose Revenue," Wall Street Journal, November 22, 2002. What is the absolute value of the price elasticity of demand on this airline route? A) 0 B) less than 1 C) greater than 1 D) approximately 1

Q: Table 6-4The publisher of a magazine gives his staff the following information:Current price$2.00 per issueCurrent sales150,000 copies per monthCurrent revenue$300,000 per monthCurrent total costs$450,000 per monthHe tells the staff, "Our costs are currently $150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to $3.00 per issue. This will result in our revenue being exactly equal to our cost."Refer to Table 6-4. Which of the following statements is correct?A) The publisher's analysis is correct only if the demand is perfectly elastic.B) The publisher's analysis is correct only if the demand is elastic.C) The publisher's analysis is correct only if the demand is perfectly inelastic.D) The publisher's analysis is correct only if the demand is unit-elastic.

Q: Suppose the absolute value of the price elasticity of demand for meals at Fortune Buffet House is ∞. What happens to sales revenue if the restaurant increases its price by 5 percent? A) Sales revenue falls by less than 5 percent. B) Sales revenue remains unchanged. C) Sales revenue falls by 100 percent. D) It cannot be determined without information on prices.

Q: Suppose the demand for milk is relatively inelastic. What happens to sales revenue if the government imposes a price floor above the free market equilibrium price in the market for milk? A) Sales revenue falls. B) Sales revenue rises. C) Sales revenue remains unchanged. D) It cannot be determined without information on prices.

Q: Suppose a decrease in the supply of wheat results in an increase in revenue. This indicates that A) the decrease in quantity sold is proportionately larger than the resulting change in price. B) the resulting increase in price is proportionately greater than decrease in quantity sold. C) the demand curve for wheat must be vertical. D) the supply curve for wheat must be vertical.

Q: Suppose a decrease in the supply of bottled water results in a decrease in revenue. This indicates that A) the demand for bottled water is inelastic in the price range considered. B) the demand for bottled water is elastic in the price range considered. C) the supply of bottled water is inelastic in the price range considered. D) the supply of bottled water is elastic in the price range considered.

Q: If the price elasticity of demand for canned soup is estimated at -1.62. What happens to sales revenue if the price of canned soup rises? A) It falls by 162 percent. B) It rises by 1.62 percent. C) It falls. D) It rises.

Q: Consider a demand curve that has a constant elasticity value of 0. What happens to quantity demanded and total revenue when price increases? A) The quantity demanded and total revenue remain the same. B) The quantity demanded does not change but total revenue increases. C) The quantity demanded and total revenue fall to zero. D) The quantity demanded does not change but total revenue decreases.

Q: Table 6-3Price per Pound (dollars)Quantity of Cheese Demanded (pounds)$163144125106876849210Refer to Table 6-3. Over what range of prices is the demand inelastic?A) over the entire range of pricesB) between $12 and $16C) between $8 and $16D) between $2 and $8

Q: Table 6-3Price per Pound (dollars)Quantity of Cheese Demanded (pounds)$163144125106876849210Refer to Table 6-3. Over what range of prices is the demand elastic?A) over the entire range of pricesB) between $14 and $16C) between $8 and $16D) between $2 and $8

Q: A service station owner in Staten Island, New York, was worried that raising the price of gasoline would cause the quantity demanded to fall by so much that he would be in a worse situation than if he did not raise the price. If raising the price of gasoline would cause the owner to receive less total revenue from the sale of gasoline, the demand for gasoline is A) elastic. B) inelastic. C) unit elastic. D) perfectly inelastic.

Q: If a firm wanted to know whether the demand for its product was elastic, unit-elastic, or inelastic, then the firm could A) survey competitors and ask them what they think demand elasticity is for the product. B) talk to its customers. C) change price a little bit and observe what happens to total revenue. D) not do anything as there is no way to find an elasticity value.

Q: 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 A) perfectly inelastic. B) perfectly elastic. C) unit-elastic. D) relatively elastic.

Q: When demand is unit-elastic, a change in price causes total revenue to stay the same because A) the percentage change in quantity demanded exactly offsets the percentage change in price. B) buyers are buying the same quantity. C) total revenue never changes with price changes. D) the change in profit is offset by the change in production cost.

Q: When demand is elastic, a fall in price causes total revenue to rise because A) when price falls, quantity sold increases so total revenue automatically rises. B) the increase in quantity sold is large enough to offset the lower price. C) the percentage increase in quantity demanded is less than the percentage fall in price. D) the demand curve shifts.

Q: Total revenue equals A) price per unit times quantity sold. B) price per unit times quantity supplied. C) price per unit times change in quantity sold. D) change in price per unit times quantity sold.

Q: The estimated price elasticities of demand for the products listed in the table as "Product A" are from Table 6-2 in the text. Indicate whether the products listed as "Product B" will have a more elastic or less elastic demand than the corresponding Product A.Product AEstimated Elasticity for Product AProduct BIs Estimated Elasticity for Product B More Elastic or Less Elastic than for Product A?Beer-0.29Samuel Adams Boston LagerChicken-0.37Organically raised chickenCocaine-0.28Illegal narcoticsCigarettes-0.25Marlboro LightsRestaurant meals-0.67Denny's Grand Slam breakfast

Q: For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value). a. Blood pressure medicine for someone who has high blood pressure and the purchase of Clairol hair coloring product. b. A new Ford Fusion or a tank of gas for your current car. c. A Seiko watch or watches in general.

Q: For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value). a. Insulin for a diabetic or aspirin for someone suffering a headache. b. A new Whirlpool 27 cu.ft. side-by-side refrigerator or electricity to power your all-electric home. c. A can of Red Bull or soft drinks in general.

Q: List the five key determinants of price elasticity of demand and explain how each determinant indicates if demand tends to be elastic or inelastic.

Q: The price elasticity of demand for Kellogg's Raisin Bran is larger in absolute value than the price elasticity for all breakfast cereals.

Q: The demand for heating oil in the short run is more elastic than the long run demand for heating oil.

Q: The demand for The Federalist Papers is likely to be more elastic than the demand for a best-selling mystery novel.

Q: 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.

Q: When there are few substitutes available for a good, demand tends to be relatively inelastic.

Q: Necessities tend to have more inelastic demands than luxuries.

Q: Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic. She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor. If I wanted to buy a mystery novel I would have many authors to choose from. Therefore, the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct? A) The demand for the textbook is more inelastic, but Jill's reasoning is incorrect. The reason the textbook has an inelastic demand is that it is more expensive than any novel. B) She is correct. C) She is confused. She should have concluded that the textbook has a more elastic demand than a novel. D) She is correct that the textbook has a more inelastic demand, but that is because most students pay for their textbooks with credit or debit cards. Most people pay for novels and other books with cash or by check.

Q: In general, a "big ticket item" such as a house or new car will A) tend to have a more elastic demand than a lower priced good. B) tend to have an inelastic demand because spending on the item takes up a large share of the average consumer's budget. C) tend to have an inelastic demand because it has many substitutes. D) tend to have a more inelastic demand the more time that passes.

Q: Table 6-2 Estimated Price Elasticity of Demand Coca-Cola -3.0 All carbonated soft drinks -1.5 All soft drinks -0.8 Refer to Table 6-2. Assume that an economist has estimated the price elasticity of demand values in the table above. Use the data in the table to select the correct statement. A) The demand for Coca-Cola is inelastic. B) The elasticity for "All soft drinks" is less than the elasticity for Coca-Cola because Coca-Cola is more of a luxury than a necessity; "All soft drinks" represent goods that are more necessity than luxury. C) The difference in elasticity values is explained by the fact that the more narrowly we define a market the more elastic the demand will be. D) There are fewer substitutes for "All carbonated soft drinks" than there are for "All soft drinks."

Q: Most people buy salt infrequently and in small quantities. Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded. Therefore A) the demand for salt will be perfectly inelastic. B) salt is a normal good. C) the demand for salt is relatively inelastic. D) the price elasticity of demand for salt is greater than 1 (in absolute value).

Q: Economist Jerry Hausman estimated the price elasticity of demand for "Post Raisin Bran" and "All types of breakfast cereals." He found that the price elasticity of demand for Post Raisin Bran was -2.5 and the price elasticity of demand for "All types of breakfast cereals" was -0.9. Which of the following can be implied from Hausman's estimates? A) The demand for "All types of breakfast cereals" is elastic. B) A 1 percent increase in the price of Post Raisin Bran will lead to a 25 percent decrease in the quantity demanded of Post Raisin Bran. C) The demand for Post Raisin Bran is more elastic than the demand for "All types of breakfast cereals." D) A 1 percent decrease in the price of breakfast cereals will lead to a 2.5 percent increase in the quantity demanded of Post Raisin Bran.

Q: Economist Jerry Hausman estimated the price elasticity of demand for breakfast cereal. He found that A) the price elasticity for a particular brand of raisin bran was the same as the elasticity of demand for all family cereals. B) the price elasticity of demand for Post Raisin Bran is less than the price elasticity of demand for Kellogg's Raisin Bran. C) the price elasticity of all family breakfast cereals is greater than the price elasticity of demand for Post Raisin Bran or Kellogg's Raisin Bran. D) the price elasticity of demand for a particular brand of raisin bran was larger in absolute value than the elasticity for all family cereals.

Q: Which of the following could explain why the demand for table salt is inelastic? A) Salt is a luxury good. B) Salt is a rare commodity. C) Households devote a very small portion of their income to salt purchases. D) Salt is a luxury for high income consumers but a necessity for low income consumers.

Q: Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes. A) less than B) equal to C) twice as great as D) greater than

Q: Holding everything else constant, the demand for a good tends to be more elastic A) the more substitutes there are for the good. B) the shorter the time period involved. C) the more consumers perceive the good to be a necessity. D) the less important the product is in consumers' budgets.