Exam 5: Elasticity of Demand and Supply

Suppose consumers spent $42 million on Christmas trees last year when the average tree cost $30 and this year spent $42 million when the average tree costs $25.Assuming nothing else changed, this data suggests that

As consumers have a longer time period to respond, the demand for a product typically becomes more inelastic.

Demand is more elastic

If city officials expect that an increase in bus fares will raise mass transit revenues, they must think that the demand for bus travel is

A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda.This means that

Elasticity is always

If income rises and the demand for toothbrushes stays the same, income elasticity of toothbrushes is said to be unit elastic.

Which of the following describes a situation in which demand must be inelastic?

Computers and software programs are

Some demand curves have constant elasticity everywhere.

If its value of cross-price elasticity is negative, a good must be a necessity.

Exhibit 5-27 Consider Exhibit 5-27.Which graph depicts a perfectly inelastic demand?

Exhibit 5-28 Use the information in Exhibit 5-28 to calculate the value of price elasticity of demand from point c to d.

A perfectly elastic supply curve

The midpoint price between $20 and $40 is

Exhibit 5-6 We can tell that demand is elastic as price falls between point a and point b in Exhibit 5-6 because

Exhibit 5-27 Consider Exhibit 5-27.Which graph depicts a perfectly elastic demand?

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the value of price elasticity of demand is

Along a linear demand curve, as the price increases from zero,

The demand for a good is elastic if