Exam 20: Elasticity

Exhibit 20-6 -Refer to Exhibit 20-6.Let S₁ be the supply curve of a producer.If S₂ is the supply curve of the same producer after the government imposes a per-unit tax,the share of the tax paid by the producer as compared to the share of the tax paid by consumers will be

If two goods are substitute goods,

Price falls from $3 to $2,and the quantity demanded rises from 360 units to 400 units.What is the price elasticity of demand between these two prices?

The demand curve for good X is generally highly inelastic at and around the current price.If we assume that the supply curve is neither perfectly elastic nor perfectly inelastic,then who will pay the greater share of a tax placed on the production of good X?

The percentage change in the quantity demanded of good X is 20 percent and the percentage change in the price of good Y is 10 percent.It follows that the __________ elasticity of demand is __________ and that the two goods are __________.

Exhibit 20-3 -Refer to Exhibit 20-3.When price decreases from $3.50 to $2.50,the price elasticity of supply is

If the demand for a good is unit elastic,then

When companies hire celebrities to advertise their products,they are attempting to make the demand for their product more ____________. If this strategy is successful,the firm can raise both ____________ and ________________.

If the seller of good X raises the price of good X,it follows that the total revenue of good X will __________,if demand is __________.

When price = $33,quantity demanded = 460.When price = $31,quantity demanded = 500.The price elasticity of demand is _______________,making this an _____________ good in the price range between $31 and $33.

For a certain good,when the good's price falls from $12 to $10,its quantity demanded rises from 10 to 12 units.The price elasticity of demand here is

Explain how and why price elasticity of demand changes as a product is defined more narrowly or more broadly. Cite an example to help support your answer.

If for good Z income elasticity is greater than 1,then demand for good Z is income __________,and good Z is a(n)__________ good.

Good Z is income unit elastic.This means that the percentage change in income is

Exhibit 20-2 -Refer to Exhibit 20-2.The market for good X is initially in equilibrium at $5.The government then places a per-unit tax on good X as shown by the shift of S₁ to S₂.What is an expression for the tax revenue raised?

If the demand for cocaine is inelastic and people commit crimes to buy drugs,then a drug bust can increase the amount of drug-related crime.

When a good is perfectly inelastic in demand,or perfectly elastic in supply,the buyers will pay the full tax that is placed on the sellers.

Which of the following is a determinant of price elasticity of demand for good Z?

A per-unit tax is placed on the production of good Y.Someone who believes that the producers of the good will end up paying the full tax may be assuming that the good's demand curve is

From the sellers' perspective,it is most desirable for a product to be perfectly elastic in demand.