Exam 5: Elasticity and Its Application

Figure 5-4 -Refer to Figure 5-4.The section of the demand curve from B to C represents the

Figure 5-7 -Refer to Figure 5-7.For prices below $8,demand is price

If an increase in income results in a decrease in the quantity demanded of a good,then for that good,the

You are in charge of the local city-owned aquatic center.You need to increase the revenue generated by the aquatic center in order to meet expenses.The mayor advises you to decrease the price of a day pass.The city manager recommends increasing the price of a day pass.You realize that

Figure 5-3 -Refer to Figure 5-3.The demand curve representing the demand for a luxury good with several close substitutes is

Melvin's Magnets earned $200 in total revenue last month when it sold 100 souvenir magnets.This month it earned $300 in total revenue when it sold 60 souvenir magnets.The price elasticity of demand for Marvin's Magnets is

Figure 5-14 -Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points C and D?

Suppose that gasoline prices increase dramatically this month.Lola commutes 100 miles to work each weekday.Over the next few months,Lola drives less on the weekends to try to save money.Within the year,she sells her home and purchases one only 10 miles from her place of employment.These examples illustrate the importance of

The price elasticity of demand measures

If the price elasticity of demand for a good is 4.0,then a 10 percent increase in price results in a

Suppose goods A and B are substitutes for each other.We would expect the cross-price elasticity between these two goods to be

If the cross-price elasticity of demand for two goods is negative,then the two goods are complements.

If the price of walnuts rises,many people would switch from consuming walnuts to consuming pecans.But if the price of salt rises,people would have difficulty purchasing something to use in its place.These examples illustrate the importance of

Figure 5-5 -Refer to Figure 5-5.At a price of $48 per unit,sellers' total revenue equals

Which of the following should be held constant when calculating an income elasticity of demand?

The price elasticity of demand measures how much

Figure 5-6 -Refer to Figure 5-6.If the price decreased from $18 to $6,total revenue would

When quantity moves proportionately the same amount as price,demand is

Suppose that demand is inelastic within a certain price range.For that price range,

A good will have a more inelastic demand,the