Exam 5: Elasticity and Its Application

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds. Using the midpoint method, what is the approximate value of the price elasticity of supply?

A perfectly inelastic demand implies that buyers

Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase revenue?

Table 5-1 -Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

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 change in equilibrium price will be

Between 1950 and today there was a

There are very few, if any, good substitutes for automotive tires. Therefore, the demand for automotive tires would tend to be

At price of $1.30 per pound, a local apple orchard is willing to supply 150 pounds of apples per day. At a price of $1.50 per pound, the orchard is willing to supply 170 pounds of apples per day. Using the midpoint method, the price elasticity of supply is about

If a change in the price of a good results in no change in total revenue, then

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.

For a good that is a necessity,

The cross-price elasticity of demand for bacon and eggs likely would be negative because bacon and eggs are complements for many people.

The flatter the demand curve that passes through a given point, the more elastic the demand.

If a supply curve is perfectly horizontal, what is the value of the price elasticity of supply?

Last year, Max bought 6 pairs of athletic shoes when his income was $35,000. This year, his income is $42,000, and he purchased 8 pairs of athletic shoes. Holding other factors constant, it follows that Max

Suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0.

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

The price elasticity of supply along a typical supply curve is

Table 5-11 -Refer to Table 5-11. Which scenario describes the market for oil in the short run?

When demand is elastic, an increase in price will cause