Exam 5: Elasticity

Refer to the information provided in Figure 5.2 below to answer the question(s) that follow. Figure 5.2 -Refer to Figure 5.2. If the price of a hamburger decreases from $6 to $2, the price elasticity of demand equals ________. Use the midpoint formula.

Related to the Economics in Practice on page 102: Which of the following best explains why demand is often less elastic in the short run than it is in the long run?

If two products are complements, the ________ elasticity of demand is ________.

If the quantity of tea demanded increases by 2% when the price of coffee increases by 6%, the cross-price elasticity of demand between tea and coffee is

Total revenue increases if price ________ and demand is ________.

An increase in quantity demanded caused no change in the equilibrium price. Thus, demand must be

Refer to the information provided in Figure 5.7 below to answer the question(s) that follow. Figure 5.7 The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve. -Refer to Figure 5.7. Had the demand for pumpkins been perfectly inelastic at Point A, the price elasticity of demand for pumpkins from the equilibrium point before the imposition of the tax to the equilibrium point after the imposition of the tax would be

The owner of a local hot dog stand has estimated that if he lowers the price of hot dogs from $2.00 to $1.50, he will increase sales from 400 to 500 hot dogs per day. Using the midpoint formula, the demand for hot dogs is

If government officials are mainly interested in generating tax revenue, then they should tax goods for which demand is price elastic.

Suppose a 10% increase in the price of steak reduces the consumption of steak by 30%. Such a price rise will induce households to spend

The cross-price elasticity of demand between good X and good Y is 0.5. Given this information, which of the following statements is true?

Which of the following, if true, would most effectively back the argument that raising cigarette taxes reduces the number of people who smoke cigarettes?

A ________ line is a perfectly price elastic demand curve.

Inferior goods will experience increasing demand when incomes increase.

A government wants to reduce electricity consumption by 10%. The price elasticity of demand for electricity is -5. The government must ________ the price of electricity by ________.

Related to the Economics in Practice on page 102: Which of the following best explains why demand is often more elastic in the long run than it is in the short run?

When demand is elastic, an increase in price will result in a decrease in total revenue.

A firm is currently producing in the inelastic portion of its demand curve. What course of action do you recommend for it, assuming it wants to raise revenue?

When the slope of a demand curve is constant, price elasticity of demand is constant as well.

If the quantity of glazed donuts demanded increases by 6% when the price of cinnamon rolls increases by 9%, the cross-price elasticity of demand between glazed donuts and cinnamon rolls is