15) Suppose Trader Joe\'s s supermarket raises the price of its steak and finds

Question

15) Suppose Trader Joe's s supermarket raises the price of its steak and finds its total revenue from steak sales does the not change. This is evidence A. elastic. B. inelastic. C. zero. that price elasticity of demand for steak is: D. unit elastic. E. none of the above 1e) If the price elasticity af ded for fotbal lickets is estimated to be 4.5, then a 10 percent increase in footbal A. 4.5 percent decrease in quantity demanded. B. 4.5 percent increase in quantity demanded. C. 45 percent decrease in quantity demanded D. 45 percent increase in quantity demanded. E. 450 percent increase in quantity demanded 17) Suppose the Good Food supermarket increases the price of a pound of bananas from $.75 to $1.25 and finds that the quantity of bananas it sells per month drops from 1,500 to 1.000. The price elasticity of demand coefficient for bananas in this price range is: A. 0.80. D. E. 0.50 none of the above B. 3.00 C. 2.00 18) In the long run, price elasticities of demand are usually A. less than they are in the short run because people can adjust B. the same as they are in the short run because tastes don't change C. greater than they are in the short run because prices rise over time D. less than they are in the short run because real prices fall over time E. greater than they are in the short run because consumers have time to adjust Exhibit 5-1 Demand curves In Exhibit 5-1, between points b and c, the price elasticity of demand measures A. 4.27 B. 1.5 C. 1.56 19) D. E. 0.42 none of the above Which of the following factors is associated with products with a highly price elastic demand? A. Few close substitutes B. A very short time period for consumers to respond to price changes. C. Many very close substitutes D. A per unit price that is only a very small portion of most peoples' budgets. 20)

Explanation / Answer

Question 15

It has been provided that supermarket has raised the price of the steak. However, total revenue from steak sales has not changed.

When change (increase or decrease) in price does not bring any change in the total revenue then in that case demand is said to be unit elastic.

So,

This is evidence that price elasticity of demand for steak is unit elastic.

Hence, the correct answer is the option (D).

Question 16

Price elasticity of demand for football tickets = 4.5

Percentage increase in football ticket price = 10%

When price of a good increases then quantity demanded of a good decreases.

So, this increase in price of football ticket price will lead to decrease in their quantity demanded.

% decrease in quantity demanded = Price elasticity of demand/% increase in price

% decrease in quantity demanded = 4.5/10 = 45

So, there would be 45 percent decrease in the quantity demanded.

Hence, the correct answer is the option (C).

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