Exam 5: Elasticity and Its Application

Figure 5-11 -Refer to Figure 5-11. If the price rises from point D to point C, total revenue

Ryan says that he would buy one cup of coffee every day regardless of the price. If he is telling the truth, Ryan's

Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

If marijuana were legalized, it is likely that there would be an increase in the supply of marijuana. Advocates of marijuana legalization argue that this would significantly reduce the amount of revenue going to the criminal organizations that currently supply marijuana. These advocates believe that the

Cross-price elasticity of demand measures how the quantity demanded of one good changes as the price of another good changes.

Table 5-4 Prica Tatal Revenup \ 10 \ 100 \ 12 \ 108 \ 14 \ 112 \ 16 \ 112 -Refer to Table 5-4. When price is between $10 and $14, demand is

Last year, Carolyn bought 6 pairs of earrings when her income was $40,000. This year, her income is $52,000, and she purchased 7 pairs of earrings. Holding other factors constant, it follows that Carolyn's income elasticity of demand is about

Table 5-1 Gond Price Elaticity of Demend A 1.3 -Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

Reta's income elasticity of demand for steak dinners is 1.50. All else equal, this means that if her income increases by 20 percent, she will buy

The demand for soap is more elastic than the demand for Dove soap.

In general, demand curves for luxuries tend to be price elastic.

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. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles, yours would

Figure 5-5 -Refer to Figure 5-5. At a price of $48 per unit, sellers' total revenue equals

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

Figure 5-4 -Refer to Figure 5-4. Assume, for the good in question, two specific points on the demand curve are (Q = 1,000, P = $40) and (Q = 1,500, P = $30). Then which of the following scenarios is possible?

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

The cross-price elasticity of demand for bacon and eggs likely would be negative because bacon and eggs are complements for many people.

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, when income equals $7,500, what is the price elasticity of demand between $16 and $20?

For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Which of the following was not a reason OPEC failed to keep the price of oil high?