Exam 5: Elasticity

If the demand curve for a product is vertical, then what is the elasticity of demand?

Moving along an elastic portion of a demand curve, the change in price will always be proportionately less than the change in the quantity demanded.

The nation's largest cable TV company tested the effect of a price reduction for premium movie channels. It lowered prices from $12 to $9.95 and found that the number of customers rose by almost 50 percent. What does this illustrate?

Ceteris paribus, if an 8 percent increase in price leads to a 6 percent increase in the quantity supplied, how would supply be described?

When demand is more elastic than supply, the largest portion of a tax is paid by the consumer.

When a 9 percent increase in price leads to a 6 percent increase in quantity supplied, supply is inelastic.

The following schedule represents a portion of Kate's demand for sandwiches. TABLE 5-1 -Refer to Table 5-1. Along this portion of Kate's demand curve for sandwiches, what is the price elasticity of demand?

When the local symphony recently raised its price for tickets to their summer concerts in the park, the symphony's total revenue actually decreased. What does this indicate about the elasticity of demand for symphony tickets?

If the income elasticity of demand for lobster is +1.5, a 5 percent increase in income will cause a 7.5 percent increase in the demand for lobster.

Price elasticity of demand is a measure of the responsiveness of the change in price to a change in quantity demanded.

The demand for gasoline is highly inelastic and the supply is highly elastic. If a tax is imposed on gasoline, how will it be paid?

If the demand curve for a product is horizontal, then what is the elasticity of demand?

Which of the following statements best describes the demand for toothpaste?

If cola and iced tea are good substitutes for consumers, what can we conclude about their elasticity from this information?

A "war on drugs" is waged and, as a result, a larger quantity of drugs flowing into Canada is seized and more drug traffickers are arrested. If demand for drugs is inelastic, what effect would one expect this to have on the total expenditure on drugs?

The elasticity in the vicinity of five different points along a demand curve varies as follows: TABLE 5-4 -Refer to Table 5-4. In the vicinity of what points would a price decrease be accompanied by an increase in total revenue?

Price elasticity of demand is a measure of the responsiveness of the change in quantity demanded to a change in price.

The price of peanut butter decreases. As a result, the price of jelly (a complement to peanut butter) rises by 5 percent and the quantity of jelly sold rises by 10 percent. What can we conclude from this information?

If the supply curve for aspirin is perfectly elastic, what effect will a reduction in demand have on the equilibrium price and equilibrium quantity?

If the income elasticity of demand for lobster is +1.5, a 5 percent increase in price will cause a 7.5 percent reduction in the quantity of lobster consumed.