Exam 5: Elasticity and Its Application

Consider luxury weekend hotel packages in Las Vegas.When the price is $250,the quantity demanded is 2,000 packages per week.When the price is $280,the quantity demanded is 1,700 packages per week.Using the midpoint method,the price elasticity of demand is about

Holding all other forces constant,if increasing the price of a good leads to a decrease in total revenue,then the demand for the good must be

Figure 5-4 -Refer to Figure 5-4.The section of the demand curve from B to C represents the

If the price elasticity of supply is 1.2,and a price increase led to a 5% increase in quantity supplied,then the price increase is about

Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for soccer balls causes the price of soccer balls to increase by 20%,then the quantity supplied of soccer balls will increase by about

If the price of milk rises,when is the price elasticity of demand likely to be the lowest?

Along the elastic portion of a linear demand curve,total revenue rises as price rises.

Suppose that when the price of wheat is $2 per bushel,farmers can sell 10 million bushels.When the price of wheat is $3 per bushel,farmers can sell 8 million bushels.Which of the following statements is true? The demand for wheat is

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 2.Which of the following events is consistent with a 0.1 percent increase in the price of the good?

When demand is inelastic,an increase in price will cause

Table 5-2 -Refer to Table 5-2.Using the midpoint method,if the price falls from $60 to $40,the price elasticity of demand is

Demand is said to be unit elastic if quantity demanded

The greater the price elasticity of demand,the

A perfectly inelastic demand implies that buyers

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

Figure 5-1 -Refer to Figure 5-1.Between point A and point B on the graph,demand is

Suppose demand is perfectly elastic,and the supply of the good in question decreases.As a result,

If marijuana were legalized,it is likely that there would be an increase in the supply of marijuana.Advocates of marijuana legalization argue that this would significantly reduce the amount of revenue going to the criminal organizations that currently supply marijuana.These advocates believe that the

Recently,in Smalltown,the price of Twinkies fell from $0.80 to $0.70.As a result,the quantity demanded of Ho-Ho's decreased from 120 to 100.What would be the appropriate elasticity to compute? Using the midpoint method,compute this elasticity.What does your answer tell you?

For a particular good,a 5 percent increase in price causes a 2 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?