Exam 6: Elasticity

At a price of $4 per unit, Gadgets Inc. is willing to supply 20,000 gadgets, while United Gadgets is willing to supply 10,000 gadgets. If the price were to rise to $8 per unit, their respective quantities supplied would rise to 45,000 and 25,000. If these are the only two firms supplying gadgets, what is the elasticity of supply in the market for gadgets?

Suppose that a firm has "pricing power" and can segregate its market into two distinct groups based on differences in elasticities of demand. The firm might charge

Refer to the diagrams. In which case would the coefficient of income elasticity be negative?

The price of product X is reduced from $50 to $45 and, as a result, the quantity demanded increases from 120 to 140 units. Therefore, demand for X in this price range

Suppose the price elasticity of supply for crude oil is 2.5. How much would price have to rise to increase production by 20 percent?

Refer to the diagrams. The case of substitute goods is represented by figure

Cross elasticity of demand measures the effect of a change in the price of one product on the quantity demanded of another product.

The demand schedules for such products as eggs, bread, and electricity tend to be

Refer to the graphs above. Which one shows a perfectly elastic demand?

Answer the question based on the following table, which shows a demand schedule. Total revenues will increase if price

We would expect

Refer to the data. Suppose quantity supplied declined by 23 units at each price, changing the equilibrium price in a direction and amount for you to determine. Over that price range, demand is

Elasticity of supply will increase when

The price elasticity of supply determines how much price would change as a result of a change in demand.

Answer the question based on the following table, which shows a demand schedule. Total revenues will decrease if price

In the graph above, what would happen to price and to total revenue if the equilibrium moved from point B to point A?

The price elasticity of demand for widgets is 0.4. Assuming no change in the demand curve for widgets, a 6 percent decrease in sales implies a(n)

Suppose that a 10 percent increase in the price of normal good Y causes a 20 percent increase in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is

You are the newly appointed sales manager of the Rock Computer Tablets Company and have been charged with the task of increasing revenues. Your economics consultants have informed you that at present price and output levels, price elasticity of demand for your product is less than one. You should

Refer to the above table. Which product is a normal good but least responsive to a change in income?