Exam 5: Elasticity

Perfect planting and harvesting weather results in a record high crop of wheat.If wheat growers experience an increase in total sales revenue,then the demand for wheat must be

The elasticity approach to measuring the sensitivity of quantity demanded to changes in price differs from using the slope because the elasticity approach calculates the ratio of the

If demand is price inelastic,a decrease in price

Which of the following statements concerning the slope and price elasticity of demand along a straight-line demand curve is correct?

When there is a positive cross-price elasticity of demand between two goods,

Butter and margarine are examples of

A $1.00 increase in the price of a restaurant meal results in a drop in quantity demanded of 5 meals.Which of the following statements is correct?

Demand for goods in broader category definitions,such as "beverages",is usually less elastic than demand for more narrowly defined goods,such as "diet colas."

The supply of a good is more price elastic,

-Figure 5-1 shows the prices of two services offered by Earl's Barber Shop and the resulting quantities demanded by customers.In this example,the price elasticity of demand for haircuts (using the midpoint formula)is

The sensitivity of one economic variable to changes in another variable is known as

-Bill's Office Furniture sells office chairs and desks.Bill's has changed the price per chair by $10 in each of four successive weeks.Figure 5-12 shows the four prices along with the corresponding sales of desks.What is the cross-price elasticity of demand of desks with respect to chairs when the price of a chair changes in the $45 to $55 range?

If demand is perfectly elastic,then

-Figure 5-6 shows the demand curve for chicken.Between points L and M,the price elasticity of demand is

A local store noticed that when it increased the price of milk from $2.50 to $3.50 per gallon,it sold 33% less milk.Since everything else remained the same,we would say the

If the demand curve is a horizontal line,

If the demand curve is a straight line and has the normal negative slope,then as quantity demanded increases,demand

The cross-price elasticity of demand is useful for determining which pairs of commodities serve as substitutes for each other.

If the price of a good increases from $20 to $25 and the quantity demanded declines from 15 to 10 units of the good,the price elasticity of demand is 5.

The price elasticity of demand will be larger in absolute value if