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    Sample Questions For Price Elasticity of Demand

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    Prieto Jason
    The document contains 4 passages related to economics concepts: 1) A proposal to raise ticket prices for a symphony assumes the price elasticity of demand is less than unity. 2) A ski area experiencing declining sales could increase revenues by a 10% price increase combined with advertising, as demand is inelastic with a price elasticity of 1.5. 3) Increasing the supply of physicians may decrease total medical expenditures if demand for physicians and hospitals is positively cross elastic, as lower physician costs would lead consumers to substitute physicians for higher cost hospitals. 4) Goods with high cross elasticity of demand are close substitutes that serve similar consumer needs, such as different types of soft drinks.

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    Sample Questions For Price Elasticity of Demand

    Uploaded by

    Prieto Jason
    383 views2 pages
    The document contains 4 passages related to economics concepts: 1) A proposal to raise ticket prices for a symphony assumes the price elasticity of demand is less than unity. 2) A ski area experiencing declining sales could increase revenues by a 10% price increase combined with advertising, as demand is inelastic with a price elasticity of 1.5. 3) Increasing the supply of physicians may decrease total medical expenditures if demand for physicians and hospitals is positively cross elastic, as lower physician costs would lead consumers to substitute physicians for higher cost hospitals. 4) Goods with high cross elasticity of demand are close substitutes that serve similar consumer needs, such as different types of soft drinks.

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    Sample questions for price elasticity of demand

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    The document contains 4 passages related to economics concepts: 1) A proposal to raise ticket prices for a symphony assumes the price elasticity of demand is less than unity. 2) A ski area experiencing declining sales could increase revenues by a 10% price increase combined with advertising, as demand is inelastic with a price elasticity of 1.5. 3) Increasing the supply of physicians may decrease total medical expenditures if demand for physicians and hospitals is positively cross elastic, as lower physician costs would lead consumers to substitute physicians for higher cost hospitals. 4) Goods with high cross elasticity of demand are close substitutes that serve similar consumer needs, such as different types of soft drinks.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    383 views2 pages

    Sample Questions For Price Elasticity of Demand

    Uploaded by

    Prieto Jason
    The document contains 4 passages related to economics concepts: 1) A proposal to raise ticket prices for a symphony assumes the price elasticity of demand is less than unity. 2) A ski area experiencing declining sales could increase revenues by a 10% price increase combined with advertising, as demand is inelastic with a price elasticity of 1.5. 3) Increasing the supply of physicians may decrease total medical expenditures if demand for physicians and hospitals is positively cross elastic, as lower physician costs would lead consumers to substitute physicians for higher cost hospitals. 4) Goods with high cross elasticity of demand are close substitutes that serve similar consumer needs, such as different types of soft drinks.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 2

    ARALIN 2

    Comprehension

    A 1. Suppose that the Board of Directors of the local symphony proposes that the
    admission price to hear the orchestra be raised as a means of raising additional funds
    to support music programs. Its members are implicitly assuming that the price
    elasticity of demand for a ticket is:
    A. less than unity
    B. greater than unity
    C. unity
    D. it really says nothing about price elasticity
    Analysis

    D 1. A downhill ski area is experiencing a decline in the number of lift tickets sold,
    falling revenues, and inadequate profits. The average price of a lift ticket is Php. 20
    and there are 2,500 tickets sold daily on average. The estimated price elasticity of
    demand is 1.5 and the lifts are currently operating at an average of 75 percent of
    capacity. Which of the following methods is most likely to increase the ski area's
    revenues and profits.
    A. a 10 percent increase in the average price of a lift ticket.
    B. an aggressive advertising campaign.
    C. a 10 percent increase in the average price of a lift ticket combined with an
    aggressive advertising campaign.
    D. a 10 percent decrease in the average price of a lift ticket.
    Synthesis

    A 1. In the last 20 years real medical expenditures have more than doubled. Physicians
    supply medical services at a lower cost than do hospitals. Thus, it has been suggested
    that total medical expenditures could be decreased by increasing the supply of
    physicians. Which of the following findings would support this position?
    A. it is found that the cross elasticity of demand between physicians and
    hospitals is positive and relatively large.
    B. it is found that the cross elasticity of demand between physicians and
    hospitals is negative and relatively large in absolute value.
    C. it is found that the cross elasticity of demand between physicians and
    hospitals is relatively large in absolute value.
    D. it is found that the demand for physicians is relatively inelastic.

    E. there is not enough information given above to determine the effect that an
    increase in the supply of physicians will have on medical expenditures.
    Evaluation
    A 1. All of the following are true about two goods with high cross elasticities of demand
    except that
    a. they cannot be in the same market because each has complete control of its own
    market
    b. they must be in the same market
    c. a small percentage increase in the price of one good will lead to a large percentage
    increase in
    demand for the other good
    d. they are close substitutes
    e. they must serve very similar needs for consumers
    Which of the following goods would be expected to have the highest price elasticity of
    demand?
    a) liquids.
    b) soft drinks.
    c) Mountain Dew.
    d) sodas (pop)

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