Exam 5: Price Elasticity of Demand

The short-run price elasticity of demand for airline travel is .05, while the long-run elasticity is 2.36. This means that a significant increase in airline ticket prices will cause airline companies to:

If the demand curve over a certain range is "price elastic," this implies that the:

Exhibit 5-5  Demand curve for computers In Exhibit 5-5, if the area OABC equals the area ODEF, the demand curve is:

Along the elastic range of a demand curve, a price change causes:

A public transit company finds that when it reduces the price of a bus ticket, total revenues remain the same. One can conclude from this that:

Suppose the Good Food supermarket increases the price of a pound of bananas from $.75 to $1.25 and finds that the quantity of bananas it sells per month drops from 1,500 to 1,000. The price elasticity of demand coefficient for bananas in this price range is:

If a good has a price elasticity of demand coefficient less than one, then:

If the price elasticity of demand is computed for two products, and product A measures .79, and product B measures 1.6, then:

Exhibit 5-1  Demand curves In Exhibit 5-1, the demand curve between points a and b is:

Exhibit 5-6  Demand curve for concert tickets In Exhibit 5-6, suppose promoters charge a price of $30 per ticket. How much total revenue will their sales generate?

When demand is price inelastic:

Suppose the president of a college argues that a 25 percent tuition increase will raise revenues for the college. It can be concluded that the president thinks that demand to attend this college is:

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

Over the elastic portion of a demand curve, a decrease in price causes:

If the percentage change in the quantity demanded of a good is greater than the percentage change in price, price elasticity of demand is:

Price elasticity of demand is defined as the ratio of the:

Price elasticity remains constant along a straight-line demand curve.

If demand for a good is price elastic, then the price elasticity will be:

If Pete raises his price of muffins from $2 to $3 and his sales revenue increases from $35,000 to $38,000, then:

If Stimpson University increases tuition in order to increase its revenue, it will: