For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value)
a. Insulin for a diabetic or aspirin for someone suffering a headache.
b. A new Whirlpool 27 cu.ft. side-by-side refrigerator or electricity to power your all-electric home.
c. A can of Red Bull or soft drinks in general.
a. The demand for aspirin is more price elastic (its elasticity has a higher absolute value) than the demand for insulin. Insulin is more necessity than luxury and has virtually no substitutes. There are substitutes for aspirin and it is not necessarily a necessity.
b. The demand for a new refrigerator is more price elastic than the demand for electricity to power your home. The Whirlpool refrigerator has many substitutes. Electricity to power your all-electric home is more necessity than luxury, and if your home is powered only by electricity, few, if any, substitutes are available.
c. The demand for Red Bull is more price elastic than demand for soft drinks in general. Narrowly defined markets (such as the Red Bull drink market) have many substitutes.
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The above figure depicts a
A) positive non-linear relationship between age and the number of hamburgers purchased per year. B) negative non-linear relationship between age and the number of hamburgers purchased per year. C) positive linear relationship between age and the number of hamburgers purchased per year. D) negative linear relationship between age and the number of hamburgers purchased per year.
Along a straight-line demand curve, the
A. slope is constant. B. ratio P / Q constantly changes. C. elasticity grows much smaller toward the right-hand end. D. All of the responses are correct.
Which of the following is a macroeconomics topic?
a. Wages of textile workers in the Northeast. b. The cost of producing 10,000 bookcases. c. The economy's annual growth rate. d. National demand for fish. e. Effects of farm subsidies on food prices.
The money market is in equilibrium when there is no excess supply of or excess demand for bonds
a. True b. False