Exam 6: Elasticity: the Responsiveness of Demand and Supply

The cross-price elasticity of demand between an unlimited texting option and an unlimited call minutes option offered from a cell phone provider would be

When Audrina raised the price of her homemade cookies, her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

Facing stiff competition, Hendrix College, a small liberal arts institution in Conway, Ark., 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. Source: Jonathan D.Glater and Alan Finder, "In New Twist on Tuition Game, Popularity Rises With the Price," New York Times, December 12, 2006 Based on the information above, the demand for Hendrix College education is

Since 1950, there has been a substantial increase in wheat production.The increase in production has led to a decrease in the price of wheat because of which of the following factors?

The process involved in bringing oil to world markets can take years.Substitutes for oil-based products such as gasoline are limited.As a result

Suppose the value of the price elasticity of demand is -3.What does this mean?

Suppose the cross-price elasticity of demand between grapefruit juice and orange juice is approximately 6.What does this mean?

If the price elasticity of demand for insulin is equal to zero then the demand curve for insulin is

When there few close substitutes available for a good, demand tends to be

If the demand for a steak is unit elastic, then

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that

Which of the following statements about the price elasticity of demand is correct?

In the alcohol industry, both wine and spirits are considered to be substitutes for beer.

The estimated price elasticities of demand for the products listed in the table as "Product A" are from Table 6-2 in the text.Indicate whether the products listed as "Product B" will have a more elastic or less elastic demand than the corresponding Product A.

Figure 6-12 -Refer to Figure 6-12.The diagram shows two supply curves, SA and SB.As price rises from P₀ to P₁, which supply curve is more elastic?

Figure 6-6 -Refer to Figure 6-6.As price falls from PA to PB, the quantity demanded increases most along D₁; therefore,

The demand for heating oil in the short run is more elastic than the long run demand for heating oil.

The value of the price elasticity of supply depends primarily on how quickly firms can acquire inputs to increase quantity supplied when price increases.

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula, what is the approximate change in the quantity of teenage labor supplied?

List the five key determinants of price elasticity of demand and explain how each determinant indicates if demand tends to be elastic or inelastic.