Exam 5: Elasticity

A recent study at a liberal arts college concluded that demand elasticity is 0.91 for college courses. The administration is considering a tuition increase to help balance the budget. What might an economist advise the school to do?

FIGURE 5-1 -Refer to Figure 5-1. What graph best illustrates a perfectly inelastic demand curve?

Which of the following will have the most elastic demand?

Suppose that a 20 percent increase in the price of gasoline causes a 5 percent decrease in the consumption of gasoline and a 30 percent drop in the sales of SUVs. What can you say about elasticities?

Which of the following statements best describes inelastic demand?

The elasticity in the vicinity of five different points along a demand curve varies as follows: TABLE 5-3 -Refer to Table 5-3. At what points would a price increase be accompanied by an increase in total revenue?

If a consumer's total expenditure on a good does not vary with price, then that consumer's demand curve is unit elastic over that range of prices.

The price elasticity of demand for tickets to local hockey matches is estimated to be equal to 0.89. What would an economist advise in order to boost ticket revenues?

The demand for a product is unit elastic. At a price of $20, 10 units of a product are sold. If the price is increased to $40, what would one expect sales to equal?

What term accurately describes supply when the quantity supplied is very responsive to changes in price?

The larger the proportion of income spent on a product, other things equal, what is indicated?

What is the definition of price elasticity of demand?

Jake and Jennifer own a business that provides personal fitness training services. After raising their prices by 10 percent, the quantity of hours they spend delivering training services fell by 6 percent. The demand for their services is price inelastic.

A perfectly elastic demand curve is vertical.

If the measured elasticity of supply coefficient equals 1.3, then what term accurately describes supply?

Arrange the following goods from least to most elastic, explaining your ordering: gasoline, Shell gasoline, and Shell gasoline at a particular gas station.

A 5 percent increase in the price of pizza causes a 5 percent drop in the quantity of both pizza and beer sold. What can you say about elasticities?

The cross-price elasticity between soda and salty chips is -3. From this we can tell that soda and salty chips are complements.

Demand is elastic when the price elasticity coefficient exceeds 1.0.

If demand is unit elastic, what is the relationship between revenue and prices?