Test Your Knowledge!

Suppose that 52,000 people attended a concert at a ticket price of $46. A week earlier 48,000 people attended the same concert at a ticket price of $54. Assuming no changes in other economic variables, the price elasticity of demand for tickets to this concert based on this example is:

In economics, price elasticity of demand is:

The more expensive the product:

In the case of an elastic product, if the price decreases:

If a product has an income elasticity of demand of 5, and buyers’ incomes increase by 25%, then:

A perfectly elastic demand curve:

A sports franchise increases its ticket prices by an average of 5%. It notices NO decrease in the number of spectators attending the games. Its price elasticity of demand is:

As a result of a twelve percent increase in the price of pretzels, the weekly quantity demanded of potato chips increases from 650 bags to 750 bags. The cross price elasticity of demand for potato chips is:

Based on what you know about the nature of the following products, which is most likely to have the lowest income elasticity of demand?

If a government puts a sales tax on a product, and the product’s price elasticity of demand is high (the demand curve is relatively flat, i.e. close to horizontal), then: