Exam 5: Elasticity and Its Application

When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is

Table 5-12 -Refer to Table 5-12. Between which two quantities listed is demand unit elastic?

For a good that is a necessity,

If the income elasticity of demand for a good is 0.56, is the good a normal or inferior good?

If the quantity supplied is the same regardless of price, then supply is

Which of the following statements is not valid when supply is perfectly elastic?

Figure 5-14 -Refer to Figure 5-14. Over which range is the supply curve in this figure the most elastic?

Supply tends to be more elastic in the short run and more inelastic in the long run.

The midpoint method is used to compute elasticity because it

Consider the following pairs of goods. For which of the two goods would you expect the demand to be more price elastic? Why? a.water or diamonds b.insulin or nasal decongestant spray c.food in general or breakfast cereal d.gasoline over the course of a week or gasoline over the course of a year e.personal computers or IBM personal computers

In January the price of widgets was $1.00, and Wendy's Widgets produced 80 widgets. In February the price of widgets was $1.50, and Wendy's Widgets produced 110 widgets. In March the price of widgets was $2.00, and Wendy's Widgets produced 140 widgets. The price elasticity of supply of Wendy's Widgets was about

Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00. This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to

The federal government is concerned about the negative effects of cigarette smoking in the United States. Suppose Congress is considering two plans. One plan would limit the production of cigarettes. The other would require manufacturers to include graphic photos on cigarette packages of people suffering cancer's effects. Which of the following statements is true?

The income elasticity of demand for caviar tends to be

In which of the following situations would supply be the most elastic?

At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.40, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about

If we observe that when the price of chocolate increases by 10%, quantity demanded falls by 5%, then the demand for chocolate is price inelastic.

Scenario 5-4 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-4. The equilibrium quantity will

Table 5-12 -Refer to Table 5-12. Between which two quantities listed is demand most inelastic?

Figure 5-1 -Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to