When Joe's Gas raises its price for regular unleaded gasoline, total
revenue from regular unleaded
gas falls to zero. It must be the
case that
A) the demand for Joe's regular unleaded gasoline is
perfectly elastic.
B) the demand for Joe's regular unleaded is
inelastic.
C) there are not many good substitutes for Joe's
regular unleaded gasoline.
D) consumers are switching to premium
grades of gasoline
A
Diet Coke is a close substitute for Diet Pepsi. When Coca-Cola
introduced Diet Coke in 1982, the
price elasticity of demand for
Diet Pepsi ______ and PepsiCo's ability to raise revenues through
price
increases ______.
A) increased; was reduced
B)
increased; increased
C) decreased; was reduced
D) had no
effect; was reduced
A
If the elasticity of demand for the latest Taylor Swift album is 1.4,
this means
A) few substitutes for the her latest album
exist.
B) a 1 percent increase in the price leads to a 14 percent
decrease in quantity demanded.
C) a 10 percent decrease in the
price leads to a 140 percent increase in quantity demanded.
D) a
5 percent increase in the price leads to a 7 percent decrease in
quantity demanded
D
All else equal, compared to small-budget items such as paper towels,
the price elasticity of
demand for big-ticket items such as
refrigerators is
A) more elastic
B) unit elastic
C)
more inelastic
D) has no effect on the own-price elasticity of demand
A
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