Exam 4: Elasticity

This summer the lobster catch in Maine has been especially large, but instead of celebrating the fisherman are suffering from a lower total revenue. (Source: New York Times, July 28, 2012) As the lobster catch increases, there is

Suppose that the demand for corn is price inelastic. If a technological advance makes corn farms more productive, the equilibrium price of corn will ________ and the farmers' total revenue will ________.

Explain the total revenue test.

Is there any set of relationships between price elasticity of supply and total revenue similar to the relationships between price elasticity of demand and total revenue?

If the demand curve for oranges is a downward sloping straight line, the price elasticity of demand will increase the

If the cross elasticity of demand between two goods is -0.56, then a fall in the price of one good leads to a ________ shift in the ________ of the other good.

Explain why the number of substitutes influences the price elasticity of demand.

When does a decrease in supply raise the price more: When demand is elastic or when demand is inelastic? When OPEC decreases the supply of oil, the price of gasoline skyrockets. Hence is the demand for gasoline elastic or inelastic?

When consumers' incomes increased 6 percent, the quantity of wine bought increased 12 percent. This result means

If a 4 percent rise in the price of peanut butter lowers the total revenue received by the producers of peanut butter by 4 percent, the demand for peanut butter

Goods whose income elasticities are negative are called

Peter's monthly income increases from $1,500 to $1,600. As a result, he increases the number of DVDs he buys per month from 2 to 3. Peter's demand for DVDs is

The marketing people at Ben and Jerry's Ice Cream Company believe that if they lower the price of their Cherry Garcia flavor ice cream by 25 percent, the quantity demanded will increase by 5 percent. If they are correct in their belief, then

Donuts and coffee are complements. When the price of a donut increases, the demand for coffee ________ and the cross elasticity of demand for coffee with respect to the price of a donut is ________.

If at a given moment, no matter what the price, producers cannot change the quantity supplied, the momentary supply

What happens to the price elasticity of demand moving down along a downward-sloping, linear demand curve?

If the price of oil is $60 per barrel, the quantity of oil supplied is 70 million barrels per day. If the price is $40 per barrel, the quantity of oil supplied is 69 million barrels per day. This implies that the

If the demand for a good is elastic, when the price increases, the

An increase in Abigail's income decreases her demand for used cars. For her, used cars are

For which of the following pairs of goods is the cross elasticity of demand positive?