Exam 6: Demand and Elasticity

Scientific evidence suggests that consumption of foods rich in fiber lowers cholesterol.As a result, the demand for bran increases at every price by 5,000 bushels and the supply curve for bran is perfectly price elastic.The quantity of bran consumed will

A correct formula (dropping all minus signs) for the calculation of the elasticity of demand between point Q₁, P₁ and point Q₂, P₂ is

A fall in the price of a competing product will produce an outward shift in the demand curve for most products.

The elasticity of any demand curve is the same as its slope.

After a number of acquisitions, Air American controls 75 percent of the U.S.market.It has been charged with "monopolizing" the U.S.air markets by the Justice Department.In its defense, the airline would want to introduce evidence that

A rise in price will always result in an increase in the total amount consumers spend on a product.

Total expenditure equals price times elasticity.

A tax on cigarettes can be expected to reduce teen smoking more than it reduces adult smoking.

As one moves down a straight-line demand curve, the elasticity decreases.

How might a market research analyst use measures of elasticity-price, cross, and income-in her work? Explain.

A decrease in the price of a good will cause a movement along the demand schedule to a higher quantity demanded.

A decrease in the price of rice from 50 cents to 40 cents a pound increases consumption from 16 to 20 tons a week in Gainesville and from 160 to 200 tons in the larger city of Miami.The elasticity of demand for rice is

Which of the following is more likely be the price elasticity of demand for anti-venom?

A recent study on enrollment at a liberal arts college concluded that demand elasticity is 0.91.The administration is considering a tuition increase to help balance the budget.The revenue-maximizing decision is to

A horizontal demand curve is perfectly elastic because a change in price will not induce a change in quantity demanded.

How would an increase in cigarette taxes succeed according to the following criteria: collecting a large amount of tax revenue; distorting demand as little as possible; discouraging consumption of harmful commodities?

A demand curve with an elasticity of 1.0 is said to be an elastic demand curve.

In the DuPont cellophane case, rivals accused DuPont of monopolizing cellophane.DuPont claimed that the relevant market was flexible wrapping material, such as wax paper and aluminum foil, rather than just cellophane.DuPont won the case.What type of evidence constituted DuPont's defense?

The price elasticity of a vertical demand curve is always

Income elasticity of demand describes how change in income affects the quantity demanded of a good.