Exam 5: Elasticity and Its Application

Scenario 5-3 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-3.The change in equilibrium quantity will be

Table 5-2 -Refer to Table 5-2.Using the midpoint method,if the price falls from $40 to $20,the price elasticity of demand is

OPEC failed to maintain a high price of oil in the long run,partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Studies indicate that the price elasticity of demand for cigarettes is about 0.4.A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6.According to the midpoint method,the government policy should have reduced smoking by

Table 5-4 -Refer to Table 5-4.When price is between $10 and $14,demand is

For a particular good,a 10 percent increase in price causes a 15 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Figure 5-4 -Refer to Figure 5-4.Assume,for the good in question,two specific points on the demand curve are (Q = 2,000,P = $15)and (Q = 2,400,P = $12).Then which of the following scenarios is possible?

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute.Using the midpoint method,supply is

As we move downward and to the right along a linear,downward-sloping demand curve,

Which of the following is not possible?

Suppose that quantity demand falls by 30% as a result of a 5% increase in price.The price elasticity of demand for this good is

Suppose that corn farmers want to increase their total revenue.Knowing that the demand for corn is inelastic,corn farmers should

The local bakery makes such great cinnamon rolls that consumers do not respond much at all to a change in the price.If the owner is only interested in increasing revenue,she should

Knowing that the demand for wheat is inelastic,if all farmers voluntarily did not plant wheat on 10 percent of their land,then

Holding all other forces constant,if increasing the price of a good leads to an increase in total revenue,then the demand for the good must be

A perfectly elastic demand implies that

If the price elasticity of supply is 0.2,and a price increase led to a 3% increase in quantity supplied,then the price increase is about

Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good.The income elasticity of demand for the good is

Which of the following is likely to have the most price inelastic demand?

Figure 5-14 -Refer to Figure 5-14.Along which of these segments of the supply curve is supply most elastic?