Exam 5: Elasticity and Its Applications

Figure 5-1 -Refer to Figure 5-1.Assume the section of the demand curve labeled A corresponds to prices between $6 and $12.Then,when the price increases from $8 to $10,

Figure 5-12 -Refer to Figure 5-12.Using the midpoint method,what is the price elasticity of supply between points D and E?

Which of the following expressions can be used to compute the price elasticity of demand?

A key determinant of the price elasticity of supply is

Figure 5-1 -Refer to Figure 5-1.Assume,for the good in question,two specific points on the demand curve are (Q = 1,000,P = $40)and (Q = 1,500,P = $30).Then which of the following scenarios is possible?

The midpoint method is used to calculate elasticity between two points because it gives the same answer regardless of the direction of the change.

When demand is inelastic within a certain price range,then within that price range,

Suppose you are in charge of setting prices at a local sandwich shop.The business needs to increase its total revenue and your job is on the line.If the demand for sandwiches is elastic,you

When the price of knee braces increased by 25 percent,the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent.BYC's price elasticity of supply of knee braces is 0.33.

Figure 5-1 -Refer to Figure 5-1.The section of the demand curve labeled C represents the

Moving downward and to the right along a linear demand curve,we know that total revenue

Suppose demand is perfectly elastic and the supply of the good in question decreases.As a result,

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,

A decrease in supply will cause the smallest increase in price when

Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good.The income elasticity of demand for the good is

Alice says that she would buy one banana split a day regardless of the price.If she is telling the truth,

In the case of perfectly inelastic demand,

As we move downward and to the right along a linear,downward-sloping demand curve,

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

Suppose the price of Twinkies decreases from $1.45 to $1.25 and,as a result,the quantity of Twinkies demanded increases from 2,000 to 2,200.Using the midpoint method,the price elasticity of demand for Twinkies in the given price range is