Exam 5: Elasticity and Its Application

Figure 5-14 -Refer to Figure 5-14. Along which of these segments of the supply curve is supply most elastic?

If the cross-price elasticity of demand for two goods is -4.5, then

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, between prices of $12 and $18, price elasticity of demand is

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 2. Which of the following events is consistent with a 0.1 percent increase in the price of the good?

Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to

Cross-price elasticity is used to determine whether goods are substitutes or complements.

If a t-shirt manufacturer supplies 1,000 t-shirts per week when the price of t-shirts is $10 and supplies 1,200 t-shirts per week when the price of t-shirts is $12, the price elasticity of supply is 2.

When the price of a bracelet was $25 each, the jewelry shop sold 20 per month. When it raised the price to $35 each, it sold 14 per month. Using the midpoint method, the price elasticity of demand for bracelets is about

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

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Figure 5-3 -Refer to Figure 5-3. Which demand curve is unit elastic?

If a 20% increase in price for a good results in a 15% decrease in quantity demanded, the price elasticity of demand is

For a particular good, a 10 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

When demand is elastic, a decrease in price will cause

Figure 5-12 -Refer to Figure 5-12. Total revenue when the price is P₂ is represented by the area(s)

Figure 5-9 -Refer to Figure 5-9. If price increases from $10 to $15, total revenue will

Cross-price elasticity of demand measures how

Suppose you are in charge of setting prices at a local sandwich shop. The business needs to increase its total revenue, and your job is on the line. If the demand for sandwiches is elastic, you

Scenario 5-2 The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%. -Refer to Scenario 5-2. Total consumer spending on aged cheddar cheese will

Figure 5-1 -Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to