Exam 6: Elasticity

The income elasticity of demand for food is roughly 1. Suppose a consumer's monthly income is $2,000, of which 20 percent is spent on food. If the income of this consumer doubles, the amount she'll spend on food will be

A demand curve that is parallel to the horizontal axis is

Other things the same, if a price change causes total revenue to change in the opposite direction, demand is

A computer company is considering lowering the price of its laptop computer to promote sales. However, it worries that this will reduce desktop computer sales. It finds the cross elasticity of demand to be 1. 5. Are its concerns legitimate? Explain.

Refer to the graphs above. A price increase from $20 to $40 causes quantity demanded to decrease from 100 units to 50 units. Which graph best illustrates the demand for this good?

If the percentage change in quantity demanded is less than the percentage change in price, then demand is said to be elastic.

The diagram concerns supply adjustments to an increase in demand (D₁ to D₂)in the immediate market period, the short run, and the long run. On the basis of this illustration, we can conclude that

Refer to the graphs above. Which one shows demand with a price-elasticity coefficient equal to zero?

Refer to the diagram. If price falls from $10 to $2, total revenue

The larger the coefficient of price elasticity of demand for a product, the

Explain how each of four determinants of elasticity of demand can affect the price elasticity of demand.

Why is the price elasticity of demand for air travel for business travelers different from that of leisure travelers?

Answer the question on the basis of the following demand schedule. Which of the following is correct?

When the price of movie tickets in a certain town was reduced, the movie theaters' revenues did not change. This suggests that the demand for movie tickets in that town has a price-elasticity coefficient of

Why is there no total revenue test for elasticity of supply?

Suppose you are given the following data on demand for a product. The price elasticity of demand (based on the midpoint formula)when price decreases from $9 to $7 is

The Bear Corporation finds that its total spending on machine parts increases after the price of machine parts falls, other things being equal. Which of the following is true about the Bear Corporation's demand for machine parts with the price change?

Supply curves tend to be

Refer to the information. Over the $7-$5 price range, demand is