Exam 5: Elasticity and Its Application

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. We can conclude that for Heather, macaroni

When demand is elastic, an increase in price will cause

Demand is inelastic if the price elasticity of demand is

Suppose demand is given by the equation: Using the midpoint method, what is the price elasticity of demand between $7 and $8?

If the cross-price elasticity of demand for two goods is negative, then the two goods are substitutes.

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

Figure 5-21 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $25 and $35?

Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic.

Demand is said to have unit elasticity if the price elasticity of demand is

A manufacturer produces 1,000 units, regardless of the market price. For this firm, the price elasticity of supply is

Figure 5-13 -Refer to Figure 5-13. Between point A and point B on the graph, demand is

Suppose that two supply curves pass through the same point. One is steep, and the other is flat. Which of the following statements is correct?

A linear, downward-sloping demand curve has a constant elasticity but a changing slope.

If the income elasticity of demand for a good is negative, then the good must be an inferior good.

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is

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

OPEC failed to maintain a high price of oil in the long run, partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

The price elasticity of demand changes as we move along a

Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is

Figure 5-5 -Refer to Figure 5-5. At a price of $10 per unit, sellers' total revenue equals