Exam 5: Elasticity and Its Application

Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for minivans causes the price of minivans to increase by 5%,then the quantity supplied of minivans will increase by about

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

The case of perfectly elastic demand is illustrated by a demand curve that is

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?

When the price of a good is $5,the quantity demanded is 100 units per month; when the price is $7,the quantity demanded is 80 units per month.Using the midpoint method,the price elasticity of demand is about

Figure 5-3 -Refer to Figure 5-3.Which demand curve is perfectly elastic?

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

Figure 5-4 -Refer to Figure 5-4.Assume the section of the demand curve from B to C corresponds to prices between $0 and $15.Then,when the price changes between $7 and $9,

When her income increased from $10,000 to $20,000,Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds.We can conclude that for Heather,macaroni

Figure 5-18 -Refer to Figure 5-18.Which supply curve is most likely relevant over a very long period of time?

When the local used bookstore prices economics books at $15 each,it generally sells 70 books per month.If it lowers the price to $7,sales increase to 90 books per month.Given this information,we know that the price elasticity of demand for economics books is about

Figure 5-4 -Refer to Figure 5-4.The section of the demand curve at point B represents the

Consider luxury weekend hotel packages in Las Vegas.When the price is $250,the quantity demanded is 2,000 packages per week.When the price is $280,the quantity demanded is 1,700 packages per week.Using the midpoint method,the price elasticity of demand is about

Normal goods have negative income elasticities of demand,while inferior goods have positive income elasticities of demand.

If we observe that when consumers' incomes rise by 10%,the quantity demanded of ice cream increases by 5%,then ice cream is an inferior good.

Figure 5-5 -Refer to Figure 5-5.The maximum value of total revenue corresponds to a price of

Suppose that Jane enjoys Diet Coke so much that she consumes one can every day.Although she enjoys gourmet cheese,she consumes it sporadically.If the price of Diet Coke rises,Jane decreases her consumption by only a very small amount.But if the price of gourmet cheese rises,Jane decreases her consumption by a lot.These examples illustrate the importance of

Suppose that 500 candy bars are demanded at a particular price.If the price of candy bars rises from that price by 10 percent,the number of candy bars demanded falls to 480.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

The income elasticity of demand for caviar tends to be

If the cross-price elasticity of demand for two goods is 1.25,then