Exam 4: Elasticity: A Measure of Responsiveness

Recall the Application about finding estimates of elasticities of demand to answer the following question(s). -According to the Application, the regular price elasticities of demand found at www.ers.usda.gov are reported as

Suppose that the elasticity of demand for a product is 0.5 and price decreases by 20%. By what percentage will quantity demanded increase?

If the quantity demanded of restaurant meals increases by 20% when income increases by 10%, the demand for restaurant meals is

The supply curve for gasoline will be more elastic in

How do you interpret the value of cross-price elasticity?

The ratio of the percentage change in quantity demanded to the percentage change in price is known as the

Which of the following products has the most elastic demand?

If the income elasticity of a good is greater than one, we say that its demand is

Suppose that the percentage change in demand is 20%, the price elasticity of supply is 2, and the percentage change in the equilibrium price is 4%. What is the price elasticity of demand?

Figure 4.4 -In Figure 4.4 supply is perfectly elastic in graph

Recall the Application about finding estimates of elasticities of demand to answer the following question(s). -According to the Application, ________ has a Web site that provides estimates of demand elasticities for hundreds of food products for dozens of countries.

If Maria spends a fixed dollar amount per week on movie rentals regardless of changes in the price, Maria's demand for movie rental can be considered

What is total revenue for a firm?

Suppose that the elasticity of demand for newspapers is 2.0 and quantity demanded decreases by 40%. What must the percentage increase in price have been?

If the percentage change in price is 10 and the percentage change in quantity supplied is 10, supply is

Suppose that in a month the price of a gallon of milk increases from $2 to $2.50. At the same time, the quantity of gallons of milk demanded decreases from 100 to 80. The price elasticity of demand for gallons of milk (calculated using the midpoint formula) is approximately

Suppose that the price elasticity of supply is 0.8 and the price increases by 10%. We would predict

How do you calculate a percentage change in quantity if given an elasticity of demand and a percentage change in price?

Suppose that the income elasticity of demand for good X is positive but less than 1. Other things being equal, which of the following statements is INCORRECT?

The cross-price elasticity of demand measures