Exam 6: Elasticity: the Responsiveness of Demand and Supply

Seth is a competitive body builder. He says he has to have his 12-oz package of protein powder to "feed his muscles" every day. On the basis of this information, what can you conclude about his price elasticity of demand for protein powder?

Suppose the current price of copper is $3 per pound and the quantity supplied is 200 pounds per day. If the price of copper falls to $2.50 per pound, the quantity supplied drops to 180 pounds per day. Use the midpoint formula to calculate the price elasticity of supply for copper.

If a firm's goal is to maximize revenue, it will price its product to correspond to the unit-elastic segment of its demand curve.

If the demand for a steak is unit elastic, then

Figure 6-4 -Refer to Figure 6-4. The inelastic segment of the demand curve

Consider the following pairs of items: a. shampoo and conditioner b. iPhones and earbuds c. a laptop computer and a desktop computer d. beef and pork e. air-travel and weed killer Which of the pairs listed will have a positive cross-price elasticity?

Holding everything else constant, the demand for a good tends to be more elastic

Suppose the demand curve for hybrid cars shifts to the right. This will cause a relatively small increase in the price of hybrid cars if

Income elasticity measures how a good's quantity demanded responds to

The midpoint formula is used to measure the elasticity of demand between two points on a demand curve

Barbara, the consummate hostess, proudly announced as she served dessert, "A port is often the perfect end to a meal, sipped with a piece of my scrumptious chocolate cake." Evidently, Barbara views port and chocolate cake as

Assume that the market for barley is in equilibrium and the demand for barley is inelastic. Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley. The drought will cause farm revenue to

Figure 6-8 -Refer to Figure 6-8. Identify the two goods which are substitutes.

Suppose the supply curve for digital cameras shifts to the right. This will cause a relatively large decrease in the price of digital cameras if both demand and supply are inelastic.

Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09. This means that

Ali's Gyros operates near a college campus. Ali has been selling 120 gyros a day at $4.50 each and is considering a price cut. He estimates that he would be able to sell 200 gyros per day at $3.50 each. a. Calculate the price elasticity of demand using the midpoint formula. b. Calculate the change in revenue as a result of the price cut.

Suppose the value of the price elasticity of demand is -3. What does this mean?

According to the Apply the Concept feature in the textbook, in the alcohol industry, both wine and spirits are considered to be substitutes for beer.

In 2016, Philadelphia imposed a tax of 1.5 cents per ounce on sweetened beverages, and PepsiCo indicated that its sales in Philadelphia fell by 40 percent after the tax took effect. If the price of PepsiCo's sweetened beverages in Philadelphia increased by 32 percent following the implementation of the tax, then demand for sweetened beverages in Philadelphia would be

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent. This indicates that the demand for tortilla chips is