Exam 6: Elasticity

An auto rental company lowers the price of its rentals to increase its market share. The price cut increases quantity demanded, but total revenue decreases. This result suggests that over this price range, the demand for the auto rentals is

When the price of candy bars decreased from $0.50 to $0.40, the quantity demanded changed from 10,000 per day to 12,000 per day. In this price range, the price-elasticity coefficient (based on the midpoint formula)for candy bars is

In which of the following cases will total revenue increase?

Assume that a 6 percent increase in income in the economy produces a 3 percent increase in the quantity demanded of good X. The coefficient of income elasticity of demand is

If a 10 percent increase in the price of Good A results in an increase of 5 percent in the quantity demanded of Good B, then it can be concluded that Goods A and B are

Suppose that a 10 percent increase in the price of normal good Y causes a 5 percent decrease in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is

The price elasticity of demand for a popular sporting event is 1.2. If the price of a ticket to this event increases by 10 percent, the quantity of tickets demanded will

Refer to the graphs above. Which one shows a situation where buyers are all willing to pay one uniform price for the product?

The price-elasticity of demand coefficient, Ed, is measured in terms of

Refer to the above graph. Consider a situation where price decreases from P₂ to P₁. In this price range, demand is relatively

If a college admits only a fixed number of applicants every year, then the school's supply curve for admissions is

The price elasticity of demand for a textbook is estimated to be 1 no matter what the price or quantity demanded. In this case,

If the price-elasticity coefficient for a good is 1.75, the demand for that good is described as

The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that

The main determinant of elasticity of supply is the

Suppose that as the price of Y falls from $9 to $8, the quantity of Y demanded increases from 1,000 to 1,250. Then the absolute value of the price elasticity (using the midpoint formula)is approximately

The Illinois Central Railroad once asked the Illinois Commerce Commission for permission to increase its commuter rates by 20 percent. The railroad argued that declining revenues made this rate increase essential. Opponents of the rate increase contended that the railroad's revenues would fall because of the rate hike. It can be concluded that

A manufacturer of frozen pizzas found that total revenue decreased when price was lowered from $5 to $4. It was also found that total revenue decreased when price was raised from $5 to $6. Thus,

When the price of a product is increased 5 percent, the quantity demanded decreases 2 percent. The price-elasticity-of-demand coefficient for this product is

If the University Chamber Music Society decides to raise ticket prices to provide more funds to finance concerts, the Society is assuming that the demand for tickets is