Exam 5: Elasticity and Its Applications

Figure: Demand 2 In the figure where S₁ is the supply of drugs with no prohibition and S₂ is the supply of drugs with prohibition, the area that represents total revenue with drug prohibition is ______, and the area that represents total revenue with no prohibition is ______.

For a price increase from $100 to $110, supply is the most elastic when quantity supplied:

The price of wheat increases, but few people cut back on their consumption of bread because:

The elasticity of demand measures:

The elasticity of demand is always negative because:

Use the midpoint method to answer this question. When a good's price increases from $20 to $25 and its quantity demanded decreases from 100 to 75, the elasticity of demand for that good is:

How does the price elasticity of supply for Henri Matisse paintings compare with the price elasticity of supply for Damien Hirst paintings? Note that Matisse is deceased, whereas Hirst still lives.

With certain goods, such as high-quality Scotch whiskey, it is nearly impossible to increase output easily, suggesting a supply elasticity value greater than 1.

If the price of Good Y falls from $10 to $8, and the quantity supplied of it falls from 1,000 units to 600 units, the price elasticity of supply is:

If demand is inelastic, a price ________ causes ________ in total revenue.

The war on drugs has caused the price of drugs to increase and this has decreased the total revenue of illegal drug producers.

If demand is inelastic then an increase in price would cause a _____ in the quantity demanded and a(n) _____ in total revenue:

Tonya consumes 10 boxes of ramen noodles a year when her yearly income is $40,000. After her income falls to $30,000 a year, she consumes 40 boxes of ramen noodles a year. Calculate her income elasticity of demand for ramen noodles.

If the price elasticity of demand is -1.2, economists would say the demand is:

Extensive flooding in the Midwest decreases the world supply of corn. If corn is inelastically demanded, what will happen to total revenues from corn production?

Good X and Good Y are related goods. When the price of Good X rises by 5 percent, the quantity demanded for Good Y rises by 15 percent. Calculate the cross-price elasticity.

Whether an increase in price leads to an increase or decrease in total revenue depends on the elasticity of supply.

The demand for oil is inelastic because there are:

Elasticity of demand is always negative.

If the price of oil increases from $80 to $90 per barrel, the quantity supplied increases from 100 to 105 million barrels per day. What is the price elasticity of supply using the midpoint method?