Exam 5: Elasticity: a Measure of Responsiveness

Maria raised the price of her burritos from $2.00 to $2.40 due to an increase on the price of cheese,one of the main ingredients.Her total revenue increased from $300 to $338.We can conclude that the demand for burritos is

Lenny buys less oatmeal for breakfast when his income rises.This means that for Lenny,

Price elasticity of demand remains unit elastic as you move up the demand curve.

Recall the Application about how changes in supply affect the price of gasoline to answer the following question(s). -Recall the Application.Suppose that the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.70.What will happen to the equilibrium price if the demand goes down by 30%?

When the price of milk increases 6%,quantity demanded decreases 4%.The price elasticity of demand for milk is

Price elasticity of demand tends to be more elastic as you move down the linear demand curve.

Suppose the price of textbooks rises from $90 to $110 and the quantity supplied increases from 750 to 850 per week.Using the initial-price method,the price elasticity of supply is

Recall the Application about the short-run and long-run elasticity of supply of coffee to answer the following question(s). -Recall the Application.If the price of coffee beans decreases by 12 percent and stays there for a year,the quantity of coffee supplied will ________ by a relatively ________ amount.

A perfectly inelastic demand curve is shown as a

Taxi fares in Cleveland are set by the city government.Suppose that the local taxi companies petition the city council to raise taxi fares.Despite the fact that higher fares will ________ the quantity demanded for taxi cab rides,the taxi companies must believe that demand for taxis is ________ and therefore that revenue will ________.

-Refer to Figure 5.6.The demand for milkshakes is unitary elastic at Point C.If the price of a milkshake is reduced from P₁ to P₂,total revenue

At a price of $25,a store can sell 28 picture frames a day.If the price falls to $20,the store can sell 35 picture frames a day.Using the initial-value method,the price elasticity of demand is

When the price of charcoal grills increases,total revenue increases for charcoal grill retailers.From this information,we can conclude that

The price of a new smartphone falls from $500 to $450.The quantity of smartphones demanded rises from 150,000 per year to 200,000 per year.Use the midpoint formula to calculate the price elasticity of demand for new smartphones.Is the demand elastic,inelastic,or unit elastic?

Suppose that the price elasticity of supply is 0.60 and the price increases by 5%.We will predict a percent increase in the quantity supplied of

If the demand for a product is perfectly inelastic,then which of the following is most likely to be true?

The price elasticity of supply is determined by how rapidly production costs increase as the total output of the industry increases.

-Refer to Figure 5.3.At Point C the price elasticity of demand is 1.Along line segment BC of the demand curve,the demand is

At a price of $4,a gas station sold 100 gallons of gasoline per week.When the price rose to $4.5,only 80 gallons were sold per week.Using the initial-value method,the price elasticity of demand for gasoline at Greedy Inc.Gas Station is

If the price elasticity of demand for tablets is 3,then a 10% increase in the price will result in an increase in total revenue.