Exam 6: Elasticity: the Responsiveness of Demand and Supply

Suppose at the going wage rate of $20 per hour, firms can hire as many hours of janitorial services as they desire.If any firm tries to lower the wage rate to $19, it will not be able to hire any janitor.What does this indicate about the supply curve for janitorial services?

In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________.

Which of the following is not a determinant of a good's price elasticity of demand?

When is demand perfectly elastic? When is demand perfectly inelastic? What are the values of the price elasticity of demand when demand is perfectly elastic or perfectly inelastic? What do perfectly elastic and perfectly inelastic demand curves look like?

Figure 6-5 -Refer to Figure 6-5.The section of the demand curve labeled "A" represents

If a supply curve is a horizontal line, supply is said to be

Article Summary Tickets for the Los Angeles production of the musical 'Hamilton' sold out quickly after going on sale in April. These tickets, sold through the box office at the Pantages Theater and through authorized seller Ticketmaster, were priced as low as $85 for mezzanine seats and $125 for orchestra seats. Once the tickets sold out, the only available seats for the musical which ran from August 11 through December 30, were through ticket resellers such as StubHub and SeatGeek, with tickets selling at an average price of $467 to $510. Ticket prices were the most expensive for August dates, with an average price of $624, and fell for dates in the following months, with December prices averaging $335. Source: Nicholas Cheng, "Don't have a ticket to 'Hamilton' yet? It's going to cost you," Los Angeles Times, August 19, 2017. -Refer to the Article Summary.Based on the difference between the face value of 'Hamilton' tickets sold by the Pantages Theater and Ticketmaster, and the prices being charged in the resellers like StubHub and SeatGeek, the demand at the face value of the tickets is

If a soda tax is implemented and demand for soda is price elastic, the decline in equilibrium quantity would be ________ and the increase in equilibrium price would be ________ than if demand were inelastic.

Suppose you are considering buying stock in the stock market, and your objective is to maximize your net worth.Furthermore, your study of the market reveals that the economy will be slowing down over the next several months.Under these conditions, it would be best to purchase stock in companies that produce

Table 6-6 -Refer to Table 6-6.Based on the data in the table and using the midpoint formula, between a price of $9.99 and $14.99, the price elasticity of demand for books is

Over longer periods of time, increases in oil prices provide firms with incentives to explore and recover oil.What does this indicate about the long-run price elasticity of supply for oil?

Assume that the demand curve for sunblock is linear and downward sloping.Which of the following statements about the slope of the demand curve for sunblock and the price elasticity of demand for sunblock are true?

From 1950 to 2017 the number of people who lived on farms fell from 23 million to fewer than 3 million.Which of the following factors have contributed to this trend?

Inelastic supply occurs whenever the elasticity of supply value is

Along a downward-sloping, linear demand curve, total revenue is the greatest

If a firm lowered the price of the product it sells and found that total revenue did not change, then the demand for its product is

Cross-price elasticity of demand is calculated as the

Suppose at the current price, the demand for copper is estimated at -3.14.What happens to sales revenue if the government imposes a price ceiling slightly below the free market equilibrium price in the copper market?

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent, and the sale of dips (like salsa and bean dip)fell 8 percent.This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ________, so the two are ________.

The Mass Rapid Transit (MRT)System in Hong Kong has been running significant losses.Transport Ministry officials have argued over whether to raise fares to combat the losses.One argument against a fare increase is that it will aggravate traffic congestion on the streets during peak commuter hours.Suppose that the current fare is $4 and the government is considering raising it to $6.Officials estimate that this reduces the number of rides purchased from 10,000 to 8,000 per day. a.Using the midpoint formula, what is the estimated elasticity of demand for MRT rides? b.What does this elasticity of demand suggest to you about what will happen to total revenue earned by the transit system if the fare increase happens? c.Last year, the MRT system incurred a loss of $50,000 per day.Do you think the fare increase will resolve the deficit problem as well as Ministry officials anticipate? Explain.