Exam 6: Elasticity

The price elasticity of demand for gasoline in the long run has been estimated to be 1.5.If an extended war in the Middle East caused the price of oil (from which gasoline is made)to increase and remain high for a decade,how would that affect total expenditures on gasoline in the long run,all other things equal?

If two goods are substitutes,their cross-price elasticity of demand should be:

Use the following to answer question: -(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $8 and $9 is approximately:

If demand is perfectly inelastic,changes in price leave total revenue unchanged.

The income elasticity of demand for an inferior good,such as a macaroni and cheese dinner,is negative.

The demand for textbooks is price-inelastic.Which statement would explain this phenomenon?

If a change in price causes total revenue to change in the same direction,we can conclude that the demand is:

Raina consumes 100% more mechanical pencils when the price of felt-tip pens increases by 50%.For Raina,pencils and pens are _____,and the cross-price elasticity of demand is _____.

Use the following to answer question: -(Figure: The Demand Curve)Use Figure: The Demand Curve.If the price is $8,total revenue is _____.If the price is $7,total revenue is _____.

If a university decreases the price of tickets to football games to collect more revenue,it is assuming that the demand for tickets is:

If the demand for golf is unit-price elastic and your local public golf course increases the greens fees for using the course,you expect:

When a public transit system (such as a subway or bus line)raises its fares,its total revenue may increase.This suggests that demand is:

Use the following to answer question: -(Figure: The Linear Demand Curve)Use Figure: The Linear Demand Curve.Suppose this is the demand curves for scarves in your scarf shop.If you increase the price of your scarves from $7 to $8,your total revenue will _____,and you notice that your price elasticity of demand is _____.

If demand is elastic,the _____ effect dominates the _____ effect,and a(n)_____ in price will cause total revenue to rise.

The income elasticity of demand for peaches has been estimated to be 1.43.If income grows by 15%,all other things unchanged,total revenue will:

A good is likely to have an inelastic demand curve if the:

The price elasticity of demand is the ratio of the percent change in quantity demanded to the percent change in price as one moves along the demand curve.

Egg producers know that the price elasticity of demand for eggs is 0.1.If they want to increase sales by 5%,they will have to lower price by:

If a good has a price-inelastic demand,then which statement is NOT likely to be characteristic of this good?

The mayor advocates raising the entrance fee at the city's pools to increase revenue for the city.The mayor is right only if the price effect dominates the quantity effect.