Exam 4: Elasticity

At a local ice cream parlor, when the price of half-gallons of chocolate ice cream was lowered by fifty cents per half-gallon, total revenue from the sale of chocolate ice cream decreased. This result indicates that

If the owner of a local movie theater wanted to increase the theater's total revenue from movie admissions, what should the owner do with ticket prices?

The demand for a good is more price inelastic if

What is the price elasticity of supply? List and briefly define three cases of the price elasticity of supply.

The more substitutes available for a product, the

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units, what is the income elasticity of demand? Is the good a normal good or an inferior good?

If the quantity demanded changes by an infinitely large amount for a given change in price, then demand is

Total revenue received by surfboard manufacturers increases by $2 million when the price of a surfboard decreases by $10. The price the elasticity of demand for surfboards is

The demand for bus rides is a downward-sloping straight line demand curve. The price elasticity of demand for bus rides ________.

-In the above figure, if the price of good A falls from P₀ to P₁ and the demand for good B increases from D₀ to D₁, then goods A and B

"The number of substitutes available affects the price elasticity of demand for a good. So one way to know if apples and oranges are substitutes for each other is to look at the price elasticity of demand for each." Comment on this assertion.

"Last October, due to an early frost, the price of a pumpkin increased by 10 percent compared to the price in the previous Halloween seasons. As a result, the quantity demanded county-wide decreased from 2 million to 1.5 million." Based on this statement, the

A good with a horizontal demand curve has a demand

When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent. a) What is the cross elasticity of demand between these two goods? b) How are these goods related? c) If the price of bananas rises, how will that affect the demand curve for peanut butter?

If a small percentage decrease in the price of chocolate causes a larger percentage decrease in the quantity supplied, the

The demand curve for microwave popcorn is linear. Which of the following definitely makes the demand for microwave popcorn more inelastic?

-The table above gives the demand schedule for a good. Using the midpoint method, find the price elasticity of demand between points A and B, between B and C, between C and D, and between D and E.

-In the figure above, at which point (a, b, or c) along the linear demand curve illustrated would demand be a) most elastic? b) most inelastic?

If your annual income rose by 10 percent and you increased your purchases of shoes from 2 pairs to 3 pairs each year, then your demand for shoes is

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