1) The short-run price elasticity of demand for tires is 0.90. The mid-point formula was used for this calculation.
If an increase in the price of petroleum (used in producing tires) causes the market prices of tires to rise from $60 to $70, by what percentage would you expect the quantity of tires demand to change? ___% (your answert should have one decimal place, and should not have a negative sign).
2) The price elasticity of demand for gizmos is known to be 1.0 (in absolute value).
Therefore, the demand for gizmos can be described as
A. elastic
B. perfectly elastic
C. perfectly inelastic
D. unitary
E. inelastic
3) Mark is selleing gourmet apples at a price of $2 per pound. Currently, he sells 100 pounds of apples per week. This week, Mark raises his price to $3, and his sales of apples fall to 75 lbs.
Mark's initial revenue from apple sale was $___ .
Mark's new revenue from apple sale is $___ .
4) An increase in the market price of men's haircut, from $16 per haircut to $26 per haircut, initially causes a local barbershop to have its employees work overtime to increase the number of daily haircuts provided from 40 to 45. When the $26 market price remains unchanged for several weeks and all other things remain equal as well, the barbershop hires additional employees and provides 60 haircuts per day.
What is the short-run price elasticity of supply? __ (Your answer should have to decimal places.)
5) In a local market, the monthly price of Internet access service decreases from $25 to $15, and the total quantity of monthly accounts across all Internet access providers increases from 100,000 to 200,000.
What is the value price elasticity of demand, expressed as a positive number? ___ . (Round your answer to two decimal places.)