Exam 5: Elasticity

If the price elasticity of demand for a product is 2 in absolutevalue, and the price elasticity of supply for the same product is 1, what is the predicted percent change in price from a 5percent fall in the supply?

If Major League Baseball ticket prices rise by 15 percent, thenumber of tickets sold falls by 5 percent. The elasticity ofdemand is:

If the price of gasoline in this country were expected to rise dueto a permanent increase in the tax on gasoline, which of thefollowing would you expect to happen?

A cross-price elasticity value that is negative will alwaysindicate goods that are substitutes.

If the price of Good X rises from $4 to $5, and the quantitydemanded of Good X falls from 200 units to 180 units, the priceelasticity of demand is:

The elasticity of supply measures how sensitive the supplycurve is to a change in price.

If the supply of raw materials is ________, increasing theirproduction leads to ________ per-unit costs.

Suppose that large oil reserves are discovered off the coast ofCuba, and these reserves will increase the world's supply of oilby 2.5 percent. If the elasticity of demand and supply of oil are 0.50 and 0.40, respectively, what happens to the price of oil?

(Figure: Elasticity of Supply) Refer to the figure. Which supplycurve is the most elastic?

What happens to revenues when the demand curve is unitelastic and the price changes?

Marge tutors English students-if she raises rates, her revenuesincrease. Brad tutors biology students-if he lowers rates, hisrevenues increase. Which of the following is TRUE?

Good X and Good Y are related goods. When the price of GoodX rises by 5 percent, the quantity demanded for Good Y risesby 15 percent. Calculate the cross-price elasticity.

If the price elasticity of demand for Good X is 1 in absolutevalue, which of the following is TRUE? I. When the price of the good changes, the total revenue for theproduct does not change II.A percentage drop in price will lead to an equal percentageincrease in quantity demanded III. When the price of the product rises, total revenue alsoincreases.

Which one of the following products would tend to haveinelastic demand?

When the supply curve of slaves is perfectly ________, everyslave bought by the redeemers results in/is ________ held incaptivity.

When the demand curve is inelastic, total revenues go down inproportion to a price increase.

Which of the following explains why local supply tends to bemore elastic than global supply?

Tonya consumes 40 steaks a year when her yearly income is$40,000. After her income falls to $35,000 a year, she consumesonly 35 steaks a year. Calculate her income elasticity of demandfor steaks.

Which factor would tend NOT to increase elasticity of supply?

If the demand curve is inelastic a price ________ causes a(n)________ in revenues.