Exam 4: Elasticity

Suppose an increase in the price of golf clubs from $75 to $125 leads to an increase in quantity supplied from 200 units to 300 units. The price elasticity of supply for golf clubs at the original price of $75 is ________, so supply is ________.

All else equal, the price elasticity of demand for a good tends to be lower:

As one moves down along a linear demand curve (i.e., from high price, low quantity pairs to low price, high quantity pairs), demand:

Suppose that a new drug has been approved to treat a life-threatening disease. The demand for that drug is shown on the accompanying graph. Prior to approval of this drug, the only treatment for this condition was any one of several non-prescription, or over-the-counter, pain relievers. The demand for one brand of the several non-prescription pain relievers is also shown on the graph. The manufacturer of the over-the-counter pain reliever would ________ total revenue by increasing the price from $15 to $16.

The accompanying graph depicts demand. The price elasticity of demand at point C is:

If the price elasticity of demand for pineapples is 0.75, then a 4 percent increase in the price of pineapples will lead to a:

Suppose you have one hour to catch a flight to Miami for spring break, and it takes 45 minutes to drive to the airport. Your car is almost out of gas and the price of gas at the closest gas station is higher than at other gas stations that are much farther away. To you, the price elasticity of demand for gas is likely to be ________ than it would be if you had several hours before the flight.

If the price elasticity of demand for a good equals one, then the demand for that good is:

The accompanying graph depicts demand. The price elasticity of demand at point A is:

The accompanying graph depicts demand.  The price elasticity of demand at point D is:

If a demand curve is horizontal at P = $5, then the price elasticity of demand is:

Refer to the accompanying figure. Let εX denote the price elasticity of demand at point X. Which of the following describes the relationship between εA, εB and εC?

The inputs used to produce cupcakes (e.g., flour, sugar, butter, and labor)are also used to produce cookies, cakes, muffins, pies and many other goods. This suggests that:

You have found data that indicates that the income elasticity of demand for generic (unbranded)shampoo is -0.7. You should conclude that generic shampoo:

Oil and oil products remain the main fuel for cars, planes, ships, and power plants. The amount of oil still in the earth is finite. Given this information, the supply of gasoline is:

When the price of insulin is $10, consumers demand 100 units; when the price is $15, consumers demand 100 units; and when the price is $20, consumers demand 100 units. Based on this information, the demand for insulin is:

If demand is ________ with respect to price, a price increase will ________ total revenue.

The cross-price elasticity of demand between two goods that are substitutes can never be:

For Outback Steakhouse, seating capacity is limited in the short run. In the long run, they can add as many seats as they want. Therefore, the price elasticity of supply for meals at Outback would be ________ in the short run than in the long run.

If the price elasticity of demand for food is 0.03, then a 6 percent increase in the price of food will lead to a ________ decrease in quantity demanded.