Exam 5: Elasticity and Its Application

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

When demand is elastic, an increase in price will cause

A perfectly inelastic demand implies that buyers

In general, elasticity is a measure of

Figure 5-11 -Refer to Figure 5-11. Using the midpoint method, the price elasticity of demand between point C and point D is about

If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about

Holding all other forces constant, if increasing the price of a good leads to an increase in total revenue, then the demand for the good must be

If the demand for donuts is elastic, then a decrease in the price of donuts will

If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price results in a

At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.40, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about

There are very few, if any, good substitutes for automotive tires. Therefore, the demand for automotive tires would tend to be

Which of the following is likely to have the most price inelastic demand?

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

In the case of perfectly inelastic demand,

At price of $1.25, a paper manufacturer is willing to supply 150 spiral notebooks per day. At a price of $1.50, the paper manufacturer is willing to supply 175 spiral notebooks per day. Using the midpoint method, the price elasticity of supply is about

Figure 5-10 -Refer to Figure 5-10. When price falls from $50 to $40, demand is

Suppose that demand is inelastic within a certain price range. For that price range,

Last month, sellers of good Y took in $100 in total revenue on sales of 50 units of good Y. This month sellers of good Y raised their price and took in $120 in total revenue on sales of 40 units of good Y. At the same time, the price of good X stayed the same, but sales of good X increased from 20 units to 40 units. We can conclude that goods X and Y are