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 equilibrium quantity will

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 increase the price of a day pass.The city manager recommends reducing the price of a day pass.You realize that

The flatter the demand curve that passes through a given point,the more elastic the demand.

A key determinant of the price elasticity of supply is the

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

The cross-price elasticity of garlic salt and onion salt is -2,which indicates that garlic salt and onion salt are substitutes.

The cross-price elasticity of demand can tell us whether goods are

For a particular good,a 3 percent increase in price causes a 10 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

A "Just Say No" drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.

For a particular good,a 10 percent increase in price causes a 5 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Figure 5-5 -Refer to Figure 5-5.Using the midpoint method,between prices of $30 and $36,price elasticity of demand is about

Figure 5-15 -Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between $6 and $8?

When the Shaffers had a monthly income of $4,000,they usually ate out 8 times a month.Now that the couple makes $4,500 a month,they eat out 10 times a month.Compute the couple's income elasticity of demand using the midpoint method.Explain your answer.Is a restaurant meal a normal or inferior good to the couple?

Suppose the point (Q = 2,000,P = $60)is the midpoint on a certain downward-sloping,linear demand curve.Then

Figure 5-1 -Refer to Figure 5-1.Between point A and point B,price elasticity of demand is equal to

Suppose demand is perfectly inelastic,and the supply of the good in question decreases.As a result,

Which of the following expressions can be used to compute the price elasticity of demand?

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.

If the price elasticity of demand for a good is 1,then a 3 percent decrease in price results in a

Table 5-2 -Refer to Table 5-2.Using the midpoint method,if the price falls from $80 to $60,the price elasticity of demand is