Exam 6: Elasticity

Figure: The Market for Lattes (Figure: The Market for Lattes) Look at the figure The Market for Lattes.What is the price elasticity of demand between the prices of $2 and $2.50 per cup, using the midpoint formula?

The income elasticity of demand for eggs has been estimated to be 0.57.If income grows by 5% in a period, how will that affect demand for eggs in that period, all other things unchanged? A.Demand will increase by more than 5.7%. B.Demand will increase by about 2.9%. C.Demand will decrease by more than 5.7%. D.Demand will decrease.

The price elasticity of demand for milk has been estimated to be somewhere between 0.49 and 0.63.If a new system of feeding and milking cows yields a 15% increase in the production of milk throughout the country, how will that affect total expenditures on milk, all other things equal? A.Total expenditures will remain unchanged. B.Total expenditures will fall. C.Total expenditures will rise. D.Not enough information is given to answer the question.

Table: Price Elasticity (Table: Price Elasticity) Look again at the table Price Elasticity.What is the price elasticity of demand between $1.00 and $0.75?

Tomas produces 100 cartons of free range eggs when the price is $5 and 150 cartons of free range eggs when the price is $7.What is the value of Tomas's price elasticity of supply? A.1.2 B.2.0 C.1.0 D.3.2

When the price of chocolate-covered peanuts increases from $1.55 to $2.00, the quantity demanded decreases from 220 to 180.If the price is $1.55, total revenue is , and if the price is $2.00, total revenue is _. A.$360; $440 B.$341; $279 C.$440; $279 D.$341; $360

Figure: The Linear Demand Curve (Figure: The Linear Demand Curve) Look at the figure The Linear Demand Curve.If the price is initially $10, then falls to $9, this will result in a(n): A.decrease in quantity demanded and a decrease in total revenue. B.decrease in quantity demanded and an increase in total revenue. C.increase in quantity demanded and a decrease in total revenue. D.increase in quantity demanded and an increase in total revenue.

The long-run price elasticity of supply of crude oil is the short-run price elasticity of supply of crude oil. A.less than B.greater than C.equal to D.not comparable to

If the quantity supplied responds substantially to a relatively small change in price, supply is: A.price-elastic. B.price-inelastic. C.negatively sloped. D.insensitive to changes in price.

If the cross-price elasticity of demand between hamburgers and cheese is positive, these two goods must be complements.

Which of the following statements is true? A.If the price elasticity of supply is greater than 1, then the supply is price-elastic. B.If the price elasticity of supply is greater than 1, then the supply is price-inelastic. C.If the price elasticity of supply is zero, then the supply is price unit-elastic. D.If the price elasticity of supply is greater than 1, then the quantity supplied is relatively unresponsive to price changes.

If the price of emergency visits to the doctor were to rise, we would expect: A.a significant decline in the number of emergency visits to the doctor. B.only a slight decline in the number of emergency visits to the doctor. C.the number of emergency visits to the doctor to increase. D.the total income of doctors to fall dramatically.

If the demand for golf is unit-price elastic and your local public golf course increases the greens fees for using the course, you would expect: A.a decrease in total revenue received by the course. B.an increase in total revenue received by the course. C.a decrease in the amount of golf played on the course. D.no change in the amount of golf played on the course.

The income elasticity of demand for peaches has been estimated to be 1.43.If income grows by 15% in a period, how will that affect total revenue from peaches in that period, all other things unchanged? A.Total revenue will rise. B.Total revenue will fall. C.Total revenue will remain unchanged. D.Not enough information is given to answer the question.

Egg producers know that the elasticity of demand for eggs is 0.1.If they want to increase sales by 5%, they will have to lower price by: A.0.1%. B.1%. C.5%. D.50%.

On a linear demand curve, the price elasticity of demand at higher prices will be: A.price-inelastic. B.price-elastic. C.price unit-elastic. D.negative.

If a change in price causes total revenue to change in the same direction, we can conclude that the demand is: A.price inelastic. B.price elastic. C.price unit elastic. D.zero elastic.

The price of coffee increases by 10%, and as a result, Alex purchases fewer doughnuts.For Alex, coffee and doughnuts are: A.complements. B.substitutes. C.inferior goods. D.normal goods.

A demand curve that is perfectly inelastic is: A.horizontal. B.vertical. C.downward sloping. D.upward sloping.

Figure: The Demand Curve for Oil (Figure: The Demand Curve for Oil) Look at the figure The Demand Curve for Oil.In the figure, the price elasticity of demand between $20 and $21 is: A.price-elastic, since the price elasticity is less than 1. B.price unit-elastic, since the price elasticity is equal to 1. C.price-elastic, since the price elasticity is a negative number. D.price-inelastic, since the price elasticity is less than 1.