Exam 4: Elasticity

In 2012, Canadian farmers did not suffer from drought conditions that affected the United States, but they did enjoy the higher corn prices. Canadian farmers reacted to the higher price by planting more corn. Suppose that the price of corn increased by 30 percent and the Canadian farmers increased the quantity of corn they supply by 20 percent. The supply of corn is

-The above table gives the demand schedule for Billy Bob's BBQ ribs. An increase in the price of a pound of ribs will lead to a decrease in total revenue when

An inferior good is a good whose income elasticity of demand is less than 0.

The amount of time elapsed since a price change impacts the elasticity of demand because as more time passes,

A shift of the supply curve of oil raises the price from $70 a barrel to $80 a barrel and reduces the quantity demanded from 40 million to 38 million barrels a day. You can conclude that the

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in income. Therefore, widgets

Suppose Target decided to lower the price on all shirts as part of its Back to School promotion. The cross elasticity of demand between pants and shirts is negative. Lowering the price on shirts will ________ the demand for pants because shirts and pants are ________.

-The figure above illustrates a linear demand curve. If the price falls from $6 to $4,

The price elasticity of demand measures

When the percentage change in quantity demanded is less than the percentage change in price, the demand for the good is ________.

An 18 percent increase in the price of a small car results in a 10 percent increase in the quantity supplied. The price elasticity of supply is equal to

The price elasticity of demand for DVDs is 2. If the price of a DVD increased by 2 percent, the quantity demanded will ________.

If the demand for a good is perfectly elastic, then the demand curve is horizontal.

If income increases by 2.0 percent, and quantity demanded of a good increases by 0.2 percent, the income elasticity for the good is

If the price of milk increased by 5 percent because of an increase in the demand for milk, and the quantity of milk supplied increased by 7 percent,

-The figure above illustrates a linear demand curve. If the price falls from $8 to $6,

Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPod music player. CEO Steve Jobs also unveiled cheaper models of its Touch music player, a touchscreen-only device. An 8-gigabyte version now costs $229, down from $299. A 32-gigabyte model costs $399, down from $499. Suppose when the price of an iPod decreases by 20 percent, the number of songs downloaded on iTunes increases by 30 percent. Based on this information iTunes are

If cable TV subscriptions and movie rentals are substitutes for each other, what is the effect in each of these markets of an increase in wages for people who work for the cable TV company? Use your analysis to determine the sign of the cross elasticity of demand between the quantity of movie rentals and the price of cable TV.

-The above figure shows the demand curve for movie rentals from Blockbuster. If Blockbuster raised its price from $2.50 to $3.00, between these two prices the price elasticity of demand equals

What does a horizontal demand curve indicate about the price elasticity of demand?