Exam 5: Elasticity and Its Application

Scenario 5-3 Suppose that the supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%. -Refer to Scenario 5-3. The price elasticity of supply for aged cheddar cheese could be

Suppose a freeze in Florida significantly reduces the supply of oranges this year. As a result, would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

Figure 5-8 -Refer to Figure 5-8. When the price is $15, total revenue is

When demand is unit elastic, price elasticity of demand equals

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

Economists compute the price elasticity of demand as the