Exam 6: Demand and Elasticity

As a result of a decline in interest rates and a rise in household income, the demand curve for housing has shifted to the right, but has retained the same slope.Consequently, the elasticity of demand for housing

A demand curve to remain unit elastic along its entire length should

The local symphony recently raised its price for tickets to their summer concerts in the park.At the end of the summer season, the symphony was surprised to see that total revenue had actually decreased.The reason was that the elasticity of demand for tickets was

Which of the following goods will have the most elastic demand at any time?

Define the following terms and explain their importance to the study of economics. a.price elasticity b.complements c.substitutes d.cross elasticity e.supply elasticity

If the elasticity of demand for cigarettes is 0.4, then an increase in the price of a pack of cigarettes from $5.00 to $6.00 would reduce quantities demanded by about

The sales manager of a retail outlet suggests that the best way to increase customers is to have a sale.If a 10 percent price cut doesn't bring in enough customers, then he'll cut prices 20 percent.Increased cash flow should take care of profits.Do you agree? Explain.

The price elasticity of new automobile purchases is about 1.2.This implies that an increase of $1,000 on a $10,000 automobile will

Since an individual spends a small share of her income on salt, the elasticity of demand is likely to be low.

If demand is elastic, an increase in price will decrease total revenue.

A price cut will increase the revenue a firm receives if the demand for its product is

A price increase will always cause a firm's revenue to fall, because they will sell less of the good.

An accurate demand curve can be derived by examining the quantities of a good that are sold over time as the price varies.

Demand curves often do not remain stationary; they shift because of changes in other variables.

The law of demand states that a lower price increases the amount of a commodity that people are willing to buy.

Two goods are substitutes if a decrease in the price of one raises the quantity demanded of the other.

Along a straight-line demand curve (dropping all minus signs), the price elasticity of demand

The price of an airline ticket rises as the amount of time between purchase and flight departure gets smaller.The airlines base the policy on the assumption that

If, as price increases by 10 percent, total revenue decreases by 10 percent demand is

The demand curve depicts quantities demanded that have been gathered as prices have changed over time.