Exam 4: Elasticity: A Measure of Responsiveness

Suppose that in a month the price of pizza increases from $4 to $5. At the same time, the quantity of pizzas demanded decreases from 200 to 190. The price elasticity of demand for pizza (calculated using the midpoint formula) is

Explain why the price elasticity varies even when a firm faces a linear demand curve.

If, regardless of price, the quantity supplied is a constant amount, then the supply curve is

Which of the following factors would indicate an inelastic demand?

If demand is inelastic, then price and total revenue are directly related.

The price elasticity of supply is a measure of the responsiveness of

If a 10% increase in price increases the quantity supplied by 15%, the price elasticity of supply is 0.67.