Exam 5: Elasticities of Demand and Supply

Anna owns the Sweet Alps Chocolate store.She charges $10 per pound for her hand made chocolate.You,the economist,have calculated the elasticity of demand for chocolate in her town to be 2.5.If she wants to increase her total revenue,what advice will you give her?

One reason why the demand for gasoline is inelastic is because

Price (dollars) Quantity supplied (units per week) A 100 120 B 80 100 C 60 80 D 40 60 E 20 40 -The table above gives the supply schedule for a product.Using the midpoint method,find the price elasticity of supply between points A and B,between B and C,between C and D,and between D and E.

Total revenue increases if the price of the good

If the demand for a good is elastic,then

What is the price elasticity of supply? List and briefly define three cases of the price elasticity of supply.

People eat at restaurants less often when their incomes fall because of a recession.Eating at restaurants must be

-The demand curve shown in the figure above is ________ over the price range from $95 to $105 per trip.

If you spend a large portion of your income on a good,

If the cross elasticity of demand between peanut butter and milk is -1.11,then are peanut butter and milk substitutes or complements?

Natural gas is difficult to store.What implication does this fact have for the elasticity of supply of natural gas?

The figure above shows the demand curve for Starbucks latte. -Refer to the figure above.Suppose Starbucks charges $3.50 per cup for its latte.Which of the following is true? i.At this price,the demand for Starbucks latte is inelastic. ii.If Starbucks raises the price of its latte,its revenue will increase. iii.If Starbucks lowers the price of its latte,it will increase its revenue.

The longer the time that has elapsed since the price of a good changed,the

The figure above shows the demand curve for Starbucks latte. -Suppose Starbucks currently charges $3.25 per cup for its latte.If Starbucks lowers the price to $3.00 per cup,based on the demand curve in the figure above,its total revenue will ________ because the demand for Starbucks latte is ________ over this price range.

At the midpoint of a linear,downward-sloping demand curve,the price elasticity of demand is

Products X,Y,and Z have price elasticities of 3.0,0.80,and 1.0 respectively.Total revenue decreases if the price of

If a good is a necessity,it has ________ substitutes and its demand is ________.

When the percentage change in the quantity demanded is less than the percentage change in price,then demand is

The income elasticity of demand for store brands of soda (that is,non-name brands)is negative.What does this fact indicate about consumers' perceptions about the store brands?

-In the figure above,what is the total revenue at point A?