Exam 5: Elasticity and Its Application

When demand is elastic,a decrease in price will cause

Total revenue will be at its largest value on a linear demand curve at the

Last month,sellers of good Y took in $100 in total revenue on sales of 50 units of good Y.This month sellers of good Y raised their price and took in $120 in total revenue on sales of 40 units of good Y.At the same time,the price of good X stayed the same,but sales of good X increased from 20 units to 40 units.We can conclude that goods X and Y are

If the price elasticity of demand is equal to 0,then demand is unit elastic.

Table 5-5 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-5.Using the midpoint method,at a price of $12,what is the income elasticity of demand when income rises from $5,000 to $10,000?

Figure 5-11 -Refer to Figure 5-11.If the price falls from point A to point B,total revenue

Economists compute the price elasticity of demand as the

Figure 5-12 -Refer to Figure 5-12.Total revenue when the price is P₂ is represented by the area(s)

Cross-price elasticity of demand measures how the quantity demanded of one good changes as the price of another good changes.

When small changes in price lead to infinite changes in quantity demanded,demand is perfectly

Suppose that 50 hot dogs are demanded at a particular price.If the price of hot dogs rises from that price by 5 percent,the number of hot dogs demanded falls to 48.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Given the market for illegal drugs,when the government is successful in reducing the flow of drugs into the United States,

If demand is perfectly elastic,the demand curve is horizontal,and the price elasticity of demand equals 1.

For which of the following types of goods would the income elasticity of demand be positive and relatively large?

Scenario 5-2 The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%. -Refer to Scenario 5-2.The equilibrium price will

If demand is price inelastic,then when price rises,total revenue

Kevin tunes pianos.If the demand for piano-tuning services is elastic,Kevin could increase his total revenue by

For a particular good,a 5 percent increase in price causes a 15 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Demand is said to have unit elasticity if the price elasticity of demand is

The demand for desserts tends to be more inelastic than the demand for red velvet cake.