Exam 5: Elasticity and Its Application

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. We can conclude that for Heather, macaroni

If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a

Figure 5-13 -Refer to Figure 5-13. Using the midpoint method, what is the price elasticity of supply between $100 and $220?

If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches

Table 5-5 The following table shows a portion of the demand schedule for a particular good at various levels of income. Price Quantity Demanded (Income =\ ) Quantity Demanded (Income =) Quantity Demanded ( Income =) \ 24 2 3 4 \ 20 4 6 8 \ 16 6 9 12 \ 12 8 12 16 \ 8 10 15 20 \ 4 12 18 24 -Refer to Table 5-5. Using the midpoint method, at a price of $8, what is the income elasticity of demand when income rises from $7,500 to $10,000?

If the demand curve is linear and downward sloping, which of the following statements is not correct?

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

If the cross-price elasticity of two goods is negative, then the two goods are

If the price of walnuts rises, many people would switch from consuming walnuts to consuming pecans. But if the price of salt rises, people would have difficulty purchasing something to use in its place. These examples illustrate the importance of

The price elasticity of demand measures how much

If the price elasticity of demand for a good is 4, then a 12 percent decrease in price results in a

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

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center in order to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues. The city manager suggests that the city lower the price of admission to raise revenues. Who is correct?

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. Your roommate still enjoys Ramen noodles very much and buys even more, but you plan to buy fewer Ramen noodles in favor of foods you prefer more. When looking at income elasticity of demand for Ramen noodles, yours would

The demand for Godiva pumpkin truffles is likely quite elastic because

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

Figure 5-2 -Refer to Figure 5-2. As price falls from Pa to Pb, we could use the three demand curves to calculate three different values of the price elasticity of demand. Which of the three demand curves would produce the smallest elasticity?

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, between prices of $48 and $54, price elasticity of demand is about