Exam 5: Price Elasticity of Demand

You are on a campus committee which sets the ticket prices for basketball games. The committee wants to increase the total money generated from ticket sales. When should the committee choose to lower its ticket prices?

If the value of the price elasticity of demand is 0.2, this means that:

Exhibit 5-7  Demand curve for concert tickets In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will:

A local Krispy Kreme doughnut shop reduced the price of its doughnuts from $4 per dozen to $3.50 per dozen, and as a result, the daily sales increased from 300 to 400 dozen. This indicates that the price elasticity of demand for the doughnuts was:

Exhibit 5-3  Demand curves for gallons of orange juice Using Exhibit 5-3, in general, whose demand for orange juice is the most elastic?

An economist estimates that .67 is the price elasticity of demand for disposable diapers. This suggests that disposable diaper producers could:

A _______ demand curve has a price elasticity of demand that is perfectly inelastic. ​

What happens to total revenue given a price increase and demand is inelastic? Why?

If the managers of the bus system found that revenues increase when fares are raised, they would conclude that price elasticity demand for subway service is inelastic.

Exhibit 5-8  Supply and demand curves for good X As shown in Exhibit 5-8, the price elasticity of demand for good X between points E and Z is:

If a straight-line demand curve slopes down, price elasticity will:

If demand is price elastic, a decrease in price causes:

The price elasticity of demand coefficient for a good will be greater:

Suppose the president of a textbook publisher argues that a 10 percent increase in the price of textbooks will raise total revenue for the publisher. It can be concluded that the company president thinks that demand for textbooks is:

As one moves down a straight-line, down-sloping demand curve, price elasticity will:

If New York City expects that an increase in bus fares will raise mass transit revenues, it must think that the demand for bus travel is:

Exhibit 5-5  Demand curve for computers In Exhibit 5-5, the total revenue at point B on the demand curve equals:

A product would be more demand price inelastic:

Which of the following events would increase the price elasticity of demand for Chicago Bears tickets that sell at a price of $20?

Exhibit 5-1  Demand curves In Exhibit 5-1, between points b and c, the price elasticity of demand measures