Exam 5: Elasticity: a Measure of Responsiveness

Consider the market for Chinese food in a large city like Philadelphia.If the number of Chinese restaurants increases and the price elasticity of demand for Chinese food is 2.0,then the equilibrium price of Chinese food will ________,the equilibrium quantity demanded of Chinese food will ________,and total Chinese food revenue will ________.

Recall the Application about how changes in supply affect the price of gasoline to answer the following question(s). -Recall the Application.Suppose the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.55.If supply decreases by 10 percent,the equilibrium price will increase by

An Internet company wants to increase the consumption of Internet packages by 15%.The price elasticity of demand for Internet packages is 2.The telephone company should

Would you expect the income elasticity of demand for Cadillacs to be positive or negative? Why?

If the price elasticity of demand for pasta is 2,then a 10% increase in the price will result in a decrease in total revenue.

Assume that the price elasticity of demand for glass is 1.7 and the price elasticity of supply for glass is 0.8.If supply rises by 18%,the price of glass will

Recall the Application regarding the elasticity of demand for gasoline varying over time to answer the following question(s). -Recall the Application.In the short run,consumers have little time to respond to changes in the price of gasoline,and therefore the demand for gasoline is ________ in the short run compared to the long run.

Total revenue will decrease if price

The price elasticity of demand for bagels is 1.7 and the price elasticity of supply for bagels is 2.0.If the demand for bagels rises by 30%,what will happen to the price of bagels?

If the price elasticity of demand for milk is 0.9 and the price elasticity of supply for milk is 1.1,then a 6% increase in the demand for the milk can be expected to increase the price by 2.5%.

If the demand for horse race tickets is inelastic,then as the price of horse race tickets increases,quantity demanded of horse race tickets will ________ and total revenue will ________.

Suppose that the price elasticity of demand for an ice cream cone is 1.9.If the local ice cream shop owner wants to increase total revenue,what would you recommend she do?

When the price of a car is $25,000,car sales are 10,000 per month.When the price of a car increases to $29,000,car sales fall to 8,000 per month.Using the initial-value method,the demand for cars is

The price elasticity of supply is measured by dividing the percentage change in quantity supplied by the percentage change in price.

The price elasticity of supply tends to become more elastic in the long run.

Recall the Application about the price of vanity license plates in Virginia to answer the following question(s). -Recall the application.Why would a decrease in price for vanity plates reduce the total revenue that the state of Virginia will receive from vanity plates?

When the price of a car is $25,000,car sales are 10,000 per month.When the price of a car increases to $29,000,car sales fall to 8,000 per month.Since the demand for cars is ________,the car company can expect revenue to ________ when they increase the price of a car.

Assume Sarah is a CPA who earns $85,000 a year and her favorite entertainment magazine costs her $15 a year.For her,the price elasticity of demand for the magazine is likely to be

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

When the price of bricks increases 5%,quantity demanded decreases 15%.The price elasticity of demand for bricks is