Exam 5: Elasticity: The Responsiveness of Demand and Supply

-Refer to Figure 5 -7. A unit elastic supply curve is shown in

-Refer to Figure 5 -7. A perfectly inelastic supply curve is shown in

The demand for Microsoft Windows products is relatively inelastic. Damage that reduces the supply of Microsoft Windows products will also cause Microsoft revenues to fall.

For the discounted price of iPhones in Emirates to succeed in increasing the total revenue of Etisalat,

When demand is price inelastic, a fall in price causes total revenue to fall, because the increase in quantity sold is not large enough to offset the drop in price.

Suppose favorable weather increased the supply of tomatoes so that the price of tomatoes fell from US$45 a ton to US$35 a ton and quantity sold increased from 300 tons to 420 tons. What is the absolute value of the price elasticity of demand?

When priced at US$10, Yasmin sells five packages of her home -made Mediterranean flat -bread per day. When she raised her price to US$15, she still sold five packages per day. Based on this information, the demand for her flat -bread is

-Refer to Figure 5 -7. A perfectly elastic supply curve is shown in

Facing stiff competition, Hendrix College, a small liberal arts institution in the U.S., decided two years ago to bolster its academic offerings, promising students at least three hands-on experiences outside the classroom, including research, internships and service projects. Although it raised tuition and fees by 29 percent, enrollment in the freshman class rose by 37 percent. Based on the information above, the demand for Hendrix College education

Suppose that the short run price elasticity of demand for oil is -0.26. Which of the following could explain why the price elasticity of demand for oil is low?

When priced at US$15, Elham sells 20 boxes of her special organic soap and at US$20 she sells 10 boxes. This shows that the demand for her organic soaps is

Cross -price elasticity of demand measures

Suppose that Jarir bookstores have a special membership program that gives customers a 20 percent discount on most hardcover books. But on Harry Potter and the Deathly Hallows, the bookstore offered a 40 percent discount with the hope of selling a very large quantity. The bookstore must believe that the demand for this book is

-Refer to Figure 5 -6. Identify the two goods which are substitutes.

Suppose a Nurses Union successfully secured a 12 percent increase in the wages of registered nurses. If a hospital responds by reducing the quantity of registered nurses hired and increasing the quantity of physician's assistants hired, what conclusion can you draw?

Some observers have been predicting for years that the printed book will be replaced with the electronic book. What does this imply about the cross -price elasticity between printed books and electronic books?

Which of the following is one reason why, in early 2008, Microsoft announced a price cut on boxed copies of its operating systems Windows Vista Home Basic, Windows Vista Home Premium, and Windows Vista Ultimate in the Gulf region?

Suppose that a Jarir bookstore manager, believes that there is no difference between charging US$22 and US$23 for the English version of Naguib Mahfouz's novel The Cairo Triology. He is convinced that the number of copies sold would be the same under both prices. The Jarir bookstore manager's argument suggests that

-Refer to Figure 5 -4. Which of the following statements is true about the price elasticity of demand?

Table 5 -2 The publisher of a magazine gives his staff the following information: He tells the staff, "Our costs are currently US$150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to US$3 per issue. This will result in our revenue being exactly equal to our cost." Which of the following statements is correct?