Exam 5: Elasticity and Its Application

Which of the following should be held constant when calculating an income elasticity of demand?

Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows.If the demand for milk is relatively inelastic,the discovery will

Table 5-2 -Refer to Table 5-2.Using the midpoint method,which of the three supply curves has the most inelastic price elasticity of supply?

Cross-price elasticity of demand measures how

A good will have a more inelastic demand,the

The production of methamphetamine (meth)is a social problem in the Midwest.Iowa is considering two potential programs: Operation Methbust would increase the number of sheriffs' deputies to search out and destroy methamphetamine labs.Operation Say No to Meth would increase the training required of public school teachers so that they could better educate students about the health risks of using meth.Assuming that each program were successful,which of the following statements is correct?

Last year,Joan bought 50 pounds of hamburger when her household's income was $40,000.This year,her household income was only $30,000 and Joan bought 60 pounds of hamburger.All else constant,Joan's income elasticity of demand for hamburger is

Which of the following is likely to have the most price inelastic demand?

In general,elasticity is a measure of

In which of these instances is demand said to be perfectly inelastic?

For a good that is a necessity,demand

When studying how some event or policy affects a market,elasticity provides information on the

Suppose that Jane enjoys Diet Coke so much that she consumes one can every day.Although she enjoys gourmet cheese,she consumes it sporadically.If the price of Diet Coke rises,Jane decreases her consumption by only a very small amount.But if the price of gourmet cheese rises,Jane decreases her consumption by a lot.These examples illustrate the importance of

Table 5-5 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-5.Using the midpoint method,at a price of $8,what is the income elasticity of demand when income rises from $7,500 to $10,000?

If sellers do not adjust their quantity supplied at all in response to a change in price,the price elasticity of supply is

Which of the following statements is valid when supply is perfectly elastic at a price of $4?

For which pairs of goods is the cross-price elasticity most likely to be negative?

Demand is said to be inelastic if

Table 5-5 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-5.Using the midpoint method,at a price of $12,what is the income elasticity of demand when income rises from $5,000 to $10,000?

Table 5-5 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-5.Using the midpoint method,when income equals $5,000,what is the price elasticity of demand between $8 and $12?