Exam 4: Elasticity

If price elasticity of demand for good X is equal to 0.4, then an increase in price will cause total expenditure on good X to

Cross-price elasticity of demand may be defined as

FIGURE 4-2 -Refer to Figure 4-2. The price elasticity of demand is continuously increasing as the price falls in diagrams)

With a downward-sloping straight-line demand curve, price elasticity of demand is

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

If per capita income increases by 10% and household expenditure on fur coats increases by 15%, one can conclude that the price elasticity of demand for fur coats is

If total expenditure on a product rises and falls directly with a productʹs price, then demand for this product has an elasticity of

FIGURE 4-1 -Refer to Figure 4-1, which shows two demand curves, one linear and the other a rectangular hyperbola. In diagram 1, the price elasticity of demand

If demand is unit elastic at all prices, then the demand curve is

There have been proposals that a tax be imposed on sugar-laden soft drinks in an attempt to reduce their consumption. Assume for simplicity that all bottled soft drinks are the same size. Suppose the initial market equilibrium is P = $2.00 and Q = 1000. FIGURE 4-4 -Refer to Figure 4-4. Suppose the government imposes a tax of $0.60 per soft drink purchased. Which of the following statements most accurately describes the economic incidence of this tax?

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

Suppose an increase in world demand for potash used in the production of fertilizer) increases the price by 22 percent. Annual Canadian production increases by 33 percent. What is the elasticity of supply of Canadian potash?

There have been proposals that a tax be imposed on sugar-laden soft drinks in an attempt to reduce their consumption. Assume for simplicity that all bottled soft drinks are the same size. Suppose the initial market equilibrium is P = $2.00 and Q = 1000. FIGURE 4-4 -Refer to Figure 4-4. Suppose the government imposes a tax of $0.60 per soft -drink purchased. The after-tax price received by the seller becomes

What does the following statement imply about price elasticity of demand? ʺAirlines experiencing higher traffic with reduced fares, but are struggling with fall in revenue.ʺ

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

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?

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

Suppose the price elasticity of demand for some good is 1.4. A 10% increase in the price of the good results in

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

The elasticity of supply for a given commodity is calculated as