Exam 6: Elasticity: the Responsiveness of Demand and Supply

If the cross-price elasticity of demand for computers and software is negative, this means the two goods are

Figure 6-2 -Refer to Figure 6-2.The absolute value of the price elasticity of demand at points a and b is 1.What is the value of Pb?

When the price of pistachio nuts is $7.50 per lb.the quantity demanded is 48 lbs.When the price of pistachio nuts is $9.00 per lb.the quantity demanded is 40 lbs.When the midpoint formula is used to measure the price elasticity of demand we can say that the demand for pistachio nuts is

Consider the following pairs of items: A.shampoo and conditioner B.iPhones and earbuds C.a laptop computer and a desktop computer D.beef and pork E.air-travel and weed killer Which of the pairs listed will have cross-price elasticity of zero?

Consider the following pairs of items: A.shampoo and conditioner B.iPhones and earbuds C.a laptop computer and a desktop computer D.beef and pork E.air-travel and weed killer Which of the pairs listed will have a positive cross-price elasticity?

Suppose the cross-price elasticity of demand between DVDs at Amazon.com and DVDs at Rakuten.com is 3.5.Based on this information, predict what happens when Amazon.com lowers its DVD prices by 10 percent.

If demand is inelastic, the absolute value of the price elasticity of demand is

If a 5 percent increase in income leads to a 10 percent decrease in quantity demanded for a product, this product is

Last year, Sefton purchased 60 pounds of potatoes to feed his family of five when his household income was $30,000.This year, his household income fell to $20,000 and Sefton purchased 80 pounds of potatoes.All else constant, Sefton's income elasticity of demand for potatoes is

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots, then

Using cross-sectional data from the two Housing Assistance Supply Experiment (HASE)sites-Brown County, Wisconsin, and St.Joseph County, Indiana-John Mulford of Rand Research estimates the long-run "permanent" income elasticity of housing expenditures to be 0.45 for owners.Using this information, what is likely to happen to housing expenditures if the government increases income transfers to recipients in HASE sites?

The price elasticity of supply is usually a positive number because

When Nablom's Bakery raised the price of its breads by 10 percent, the quantity demanded fell by 15 percent.What was the effect on sales revenue?

If demand is inelastic, the absolute value of the price elasticity coefficient is greater than one.

Figure 6-7 -Refer to Figure 6-7.Using the total revenue test to verify the price elasticity between points a and b on the demand curve, demand is

The demand for most farm products is relatively inelastic.A drought that reduces the supply of farm products will also cause farm revenues to fall.

Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

Perfectly inelastic demand is represented by a demand curve which is ________, and relatively inelastic demand is represented by a demand curve which is ________.

If the demand for a product is elastic, the quantity demanded changes by a larger percentage than the percentage change in price.

You are the manager of a theater.At present the theater charges the same admission price of $8 to all customers, regardless of age.You propose a two-tier pricing scheme: $5 for children under the age of 12 and $10 for adults.You tell your supervisor that your proposal is likely to increase revenue.What must be true about the price elasticity of demand if your proposal is to achieve its goal of raising revenue? Explain your answer.