Seminar Elasticity Part Elasticity recap

Seminar 3. Elasticity

Part 1. Elasticity recap

1. 
   Price elasticity of demand measures the percentage change in ___________ caused by a percentage change in ______________
   

2. 
   Income elasticity of demand is defined as __________________________
   

3. 
   If the demand for a product is said to be elastic, this is demand for which price elasticity is ________ than 1.
   

4. 
   Which of he following pairs of good is likely to have a positive cross price elasticity of demand?
   
   1. 
      A Sony Playstation and the games that are played on it
      
   2. 
      A Sony Playstation and Microsoft X Box
      
   3. 
      Airline travel and airline fuel
      

5. 
   A manufacturer reduces the price of its digital cameras by 20% and, as a result, the volume of sales rises by 30%. Therefore, the value of price elasticity of demand for the good is _______________.
   

6. 
   For alcohol, the short run price elasticity of demand is estimated to be 0.2 in Europe. This means that the demand for alchohol is relatively price ___________and that prices need to increase by _______ to reduce alcohol consumption per head by 15%. Will producer be able to increase TR by decreasing the price?
   

7. 
   Suppose that a pizza vendor at a basketball game can sell 3,000 slices of pizza per night at a price of $3 per slice. If the vendor raises the price to $4 per slice, the number of slices sold falls to 2,000. Based on this information, the price elasticity of demand is ______________
   

8. 
   An income reduction of 15% causes Sardor to increase his purchase of minced beef by 10%. Which of the following statements is most likely to be correct?
   
   1. 
      The income elasticity of demand for minced beef is -2/3 and ground beef is a superior good
      
   2. 
      The price elasticity of demadn for ground beef is -1.5 and ground beef is a normal good
      
   3. 
      The income elasticity of demand for minced beef is -2/3 and ground beef is an inferior good
      
   4. 
      The price elasticity of demand for ground beef is -2/3 and minced beef is a normal good
      

9. 
   The income elasticity of demand for private dental services, rental movie services (Amazon prime, Apple TV, and others) and private label clothing available in supermarkets (Carrefour, Wallmart, Tesco) have been estimated to be +2.5, +0.8, and -1.5 respectively. Interprete these coefficients.
   

10. 
    An increase in the price of hot dogs from $1.50 to $2.10 increased the average number of beef burgers demanded per week from 300 to 360. Assuming that all other economic variables were held constant the cross-price elasticity of demand between hot dogs and beef burgers is ___________ which indicates that the two goods are __________
    

11. 
    A café observed an increase in the demand for its coffee following a rise in the price of a cup of tea from $1.20 to $1.50. Assuming the cross price elasticity of demand of coffee with respect to a change in price of tea is +0.8, by how much (in per cent) will the demand for coffee have increased?