Exam 4: Elasticity

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 = $16 and Q = 95.What is the total after-tax revenue received per day by the seller after imposition of the tax?

Suppose that the quantity of lemonade demanded falls from 103 000 litres per week to 97 000 litres per week as a result of a 10% increase in its price.The price elasticity of demand for lemonade is therefore

If two goods,X and Y,have a positive cross elasticity of demand,then we know that they

Income elasticity of demand measures the extent to which

If the income elasticity of demand for a good is 0.75,a 25% increase in income results in

Normal goods

An increase in income will

An inferior good has

An upward-sloping straight-line supply curve through the origin has an elasticity of

Suppose a fast-food chain determines that the price elasticity of demand for its hamburgers is 1.7,and the price of the hamburger is currently $4.00.What will be the effect on quantity demanded and total expenditure on this chainʹs hamburgers if the price is increased to $6.00?

Producers will bear a larger burden of a sales tax if

Suppose the cross elasticity of demand between two goods,X and Y,is negative.If the price of X decreases,the quantity demanded will

Suppose you are advising the government on changes in the gasoline market.The current price is $1.00 per litre and the quantity demanded is 2.5 million litres per day.Short-run price elasticity of demand is constant at 0.3.If the supply of gasoline is reduced so that the price rises to $1.50 per litre,then quantity demanded is predicted to fall in the short run by

If a productʹs income elasticity of demand is 1.7,we can conclude that

Which of the following tends to be true of the income elasticity of demand for food?

Suppose the price of take-out pizza has been stable for many months at exactly $12.50 per pizza - and Olivier buys 6 pizzas per month at this price.When the price rises to $12.55 per pizza,Olivierʹs quantity demanded drops to zero.Apparently,Olivierʹs price elasticity of demand for take -out pizza is

As the price for some product increases from $4.00 to $5.00 per unit,quantity demanded decreases from 400 to 300 units per month.For this segment of the demand curve,the price elasticity of demand is

The elasticity of supply for some product will tend to be larger

As the price for some product decreases from $4.00 to $3.00 per unit,quantity demanded increases from 400 to 500 units per day.For this segment of the demand curve,the price elasticity of demand is

The formula for income elasticity of demand may be written as which of the following?