Exam 4: Elasticity

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?

An inferior good has

If the demand for a product has an income elasticity of -3.4, we can conclude that

FIGURE 4-3 -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. How much tax revenue does the city government collect per day?

Consider a firmʹs price elasticity of supply. If firmsʹ costs rise rapidly as output increases, the

Income elasticity of demand measures the extent to which

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

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

What does the following statement imply about price elasticity of demand? ʺCherry producers in British Columbia experienced a healthy increase in revenues this year, despite a reduced harvest due to poor weather conditions.ʺ

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 ) We can therefore conclude that these two goods are .

For a normal good, the quantity demanded

FIGURE 4-3 -Suppose a market is in equilibrium at price P0, and then an excise tax of t dollars per unit of the good is imposed. At a price of P0 + t) there will be excess for the good unless the demand curve is .

Every month Olivier buys exactly 6 take-out pizzas even though the price may fluctuate significantly. Apparently, Olivierʹs price elasticity of demand for take-out pizza is

Suppose an increase in world demand for potash used in the production of fertilizer) increases the price from $285 per tonne to $315 per tonne. Annual Canadian production increases from 15 million tonnes to 17 million tonnes. What is the elasticity of supply of Canadian potash?

If the demand for some good fluctuates, but the supply curve is stable, then which of the following combinations would generally yield the greatest quantity fluctuations?

Consider the following data for a hypothetical economy. TABLE 4-3 -Refer to Table 4-3. The income elasticity of demand for gasoline in this economy is

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. What is the implied price elasticity of demand for university attendance?

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

A perfectly horizontal demand curve shows that the price elasticity of demand is

FIGURE 4-3 -Refer to Figure 4-3, which shows a demand shift and the short-run and long-run supply curves for some product. In the new long-run equilibrium at EL, producersʹ revenue