Exam 6: Elasticity: the Responsiveness of Demand and Supply

If the market for a product is narrowly defined, then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

Suppose the absolute value of the price elasticity of demand for meals at Fortune Buffet House is ∞.What happens to sales revenue if the restaurant increases its price by 5 percent?

Table 6-8 The town of Bloomfield is well known for its basketball team.The price of basketball game tickets is determined by market forces.Table 6-8 above shows the demand and supply schedules for basketball games tickets. -Refer to Table 6-8.What is the most distinctive feature of the supply curve?

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

The price elasticity of supply is usually a positive number because

If a firm's goal is to maximize revenue, it will price its product to correspond to the unit-elastic segment of its demand curve.

If the quantity demanded for a good rises as income rises then the income elasticity of demand for this good is ________ than 0, and the good is ________ good.

The absolute value of the price elasticity of demand for telescopes is 1.5.Therefore, telescopes can be classified as a luxury.

Which of the following statements about the price elasticity of demand along a downward-sloping linear demand curve is true?

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03.This means that

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

Figure 6-10 -Refer to Figure 6-10.A perfectly elastic supply curve is shown in

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

Income elasticity measures how a good's quantity demanded responds to

Figure 6-1 -Refer to Figure 6-1.A perfectly inelastic demand curve is shown in

If the price elasticity of demand is unit elastic, a 10 percent increase in price will result in a 10 percent increase in revenue.

Inelastic supply occurs whenever the elasticity of supply value is

For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value). a.Blood pressure medicine for someone who has high blood pressure or the purchase of Clairol hair coloring product. b.A new Ford Fusion or a tank of gas for your current car. c.A Seiko watch or watches in general.

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.

We should never assume that an inelastic demand curve is a perfectly inelastic demand curve because