Exam 4: Elasticity

Consider the following data for a hypothetical economy. TABLE 4-5 -Refer to Table 4-5.The cross-price elasticity of demand for transit passes in terms of the price of gasoline is________. A rise in the price of gasoline causes the demand curve for transit passes to shift to the ________.

If the total expenditure on cars increases when the price of cars rises,the price elasticity of demand for cars is

Suppose you are advising the government on changes in the gasoline market.The current price is $1.00 per litre and the long-run price elasticity of demand is constant at 0.8.If a tax on gasoline causes the price to rise to $1.50 per litre,then quantity demanded is predicted to fall in the long run by

Suppose the cross-elasticity of demand for two goods,domestic cheese and imported cheese,is positive.If the price of imported cheese falls,then quantity demanded will

Suppose that the quantity demanded of a good rises from 40 units to 60 units per month when the price falls from $1.05 to 95 cents per unit.The price elasticity of demand for this product is

Consider an excise tax imposed on daily parking charges in the downtown of a small city.Before the imposition of the tax,equilibrium price and quantity are $15 and 100 cars parked.(P = $15,Q = 100).The city government imposes a tax of $3 per car parked per day.Market equilibrium adjusts to P = $18 and Q = 100.Which of the following statements about the burden of the tax is correct?

Suppose an analysis of the possible effects of increases in university tuition fees predicts that a 10% increase in tuition fees will result in a 3% decline in enrolment.Given the information this provides about price elasticity of demand,what is the predicted effect on total expenditure on tuition fees?

The ʺeconomic incidenceʺ of an excise tax illustrates

Suppose that the quantity demanded of paperback novels rises from 80 000 to 120 000 units per month when the price falls from $11 to $9 per unit.The price elasticity of demand for this product is

The table below shows the demand schedule for museum admissions in a small city. TABLE 4-1 -Refer to Table 4-1.Between the prices of $2 and $4 the price elasticity of demand is

Suppose a decrease in world demand for potash (used in the production of fertilizer)decreases the price by 5 percent.Annual Canadian production decreases by 2 percent.What is the elasticity of supply of Canadian potash?

Rania is selling boxes of cookies door to door in her neighbourhood.At a price of $10 per box she sold 40 boxes per day.When the price was reduced to $4 per box she sold 100 boxes per day.Assuming that the demand conditions were unchanged,what is the price elasticity of demand for Raniaʹs cookies?

When the percentage change in quantity demanded is less than the percentage change in price that brought it about,demand is said to be

Suppose a decrease in world demand for potash (used in the production of fertilizer)decreases the price from $400 per tonne to $240 per tonne.Annual Canadian production decreases from 12 million tonnes to 8 million tonnes.What is the elasticity of supply of Canadian potash?

Which of the following illustrates elastic demand?

For which of the following pairs of products would we expect the cross elasticity of demand to be negative?

Suppose national income is rising steadily at 2% per year over a 5-year period.Over the same time period,suppose quantity demanded for iPods and iPhones increases at 5% per year,but no other relevant variables are changing.We can conclude that the income elasticity for these products is ________ and that these products are ________ goods.

If pizza and beer are complementary goods,we can conclude that

Suppose you are shown two intersecting demand curves that are drawn on the same scale.At the point of intersection,one of the demand curves is steeper than the other.Which of the following could explain the difference in slopes?

If household income increases by 50% and desired household expenditure on vacation travel increases by 15%,the price elasticity of demand for vacation travel is