Exam 5: Elasticity and Its Application

Table 5-1 Suppose a coffee shop faces the following demand schedule for coffee. -Referring to Table 5-1, comparing the sales at $1.00 and $3.00, which of the statements below is true?

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

If the cross-price elasticity of demand between goods X and Y is 0.9 this means:

If law enforcement agencies prohibit the use of drugs such as heroin, cocaine and crack and the demand for drugs is inelastic, it is possible that:

Over three years the elasticity of demand for oil heaters will be greater than over ten years.

The elasticity of demand for a good tends to increase if:

Demand is said to be inelastic if:

Necessities tend to have price inelastic demands, whereas luxuries have price elastic demands.

Graph 5-1 -In Graph 5-1, the section of the demand curve labelled C represents the:

Graph 5-2 -In Graph 5-2, the elasticity of demand from point A to point B, using the midpoint method, would be:

In any market, total revenue is the price:

Suppose a demand function yields an equilibrium price of $5.00 and an equilibrium quantity of 50 000 individual units. The equilibrium quantity could also be expressed in units of 1000, yielding an equilibrium of $5.00 and 50 units. How would expressing the quantity in units of 1000 affect the value of the slope and the elasticity?

Table 5-2 Quantities purchased -Refer to Table 5-2. Good X is: