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) We learn from the article that despite the larger quantity of lobster caught, the total revenue of the fisherman has decreased. This fact means that the demand for lobster is

You are the new vice president in charge of advertising at Taco Bell. In your upcoming advertising campaign, you plan to degrade the fast food competitor whose product is the closest substitute for Taco Bell's tacos. That would be the fast food chain whose cross elasticity of demand with your tacos is equal to

Using average price and average quantity, calculate the price elasticity of demand if a price rise from $8 to $10 and decreases the quantity demanded from 20 units to 15 units. The price elasticity of demand equals

The larger the portion of a person's total budget spent on a good, the more inelastic the demand for the good.

Suppose bad weather decreases the wheat harvest by 12 percent. If the price elasticity of demand for wheat is 0.6, how would the crop failure affect the price of wheat? Would the crop failure benefit or harm wheat farmers?

The "Economics in Action" in the text mentions that the elasticity of demand for agricultural products is 0.42. If a drought boosts the price of corn 25 percent, then we can calculate the quantity of corn demanded ________.

If a hot dog vendor on a street corner experiences an increase in total revenue after lowering the price of a hot dog, then the demand for the hot dogs must be elastic.

When the price of perfume changes from $24 to $26, the quantity supplied increases from 100 jars to 150 jars. What is the elasticity of supply of perfume?

If the demand curve is a downward sloping straight line, the price elasticity of demand always

The income elasticity of demand is largest for

If a price decrease results in your expenditure on a good decreasing, your demand must be

A local pizzeria raised its price from $9 to $11 for each pizza and the sales of its pizza decreased from 150 to 100 per day. What is the price elasticity of demand in this case?

If the cross elasticity of demand between goods A and B is negative,

If the cross elasticity of demand between coffee and tea is positive, an increase in the price of tea will shift the demand curve for

A 10 percent decrease in the price of a Pepsi decreases the demand for a Coca-Cola by 50 percent. The cross elasticity of demand between a Pepsi and Coca-Cola is

When the demand for a good is perfectly elastic, ________.

-The figure above represents the behavior of total revenue as price falls along a straight-line demand curve. What is the price elasticity of demand if total revenue is given by point f?

A negative value for the cross elasticity of demand between two goods indicates that

If the price of a pumpkin rises and consumers' total expenditure on pumpkins increases, then the demand for pumpkins is inelastic.

-The figure illustrates the demand for magazines. Newsagents will maximize their total revenue when they ________.