Exam 4: Elasticity

Last year when John graduated and received a 20 percent pay increase, the average number of restaurant meals he consumed rose from one a week to three a week. Hence his income elasticity for restaurant meals is

Demand is price elastic if a

Moving up (to the left) along a linear demand curve, the price elasticity of demand

-The above figure shows the demand curve for movie rentals from Redbox. At which of the following prices does Redbox have the maximum total revenue?

Refining gasoline for our cars requires a very specialized resource, crude oil. As a result, the

If the price of a good increases from $3 to $4, and the quantity demand remains unchanged, then the demand is

The larger the portion of a person's total budget spent on a good, the more inelastic the demand for the good.

If a college wanted to increase its revenues from tuition payments, should it increase the tuition of day and evening students alike?

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units, what is the income elasticity of demand? Is the good a normal good or an inferior good?

If demand is inelastic, an increase in the price will

The price elasticity of supply of laptop computers equals 1.5 if

A rise in the price of good A shifts the ________ good B rightward if the cross elasticity of demand between A and B is ________.

By reviewing its sales records, Dell economists discover that when Dell lowers the price of its personal computers, the total revenue Dell obtains from the sale of its personal computers rises. Hence

-The figure above represents the behavior of total revenue as price falls along a straight-line demand curve. What is the price elasticity of demand if total revenue is given by point f?

Suppose that the price elasticity of supply for oil is 0.1. Then, if the price of oil rises by 20 percent, the quantity of oil supplied will increase

Dan sells newspapers. Dan says that a 4 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 8 percent. According to Dan, the demand for newspapers is ________.

Suppose that the quantity of pizza demanded decreased by 15 percent after an increase in price of 10 percent. What is the price elasticity of demand for pizza?

Suppose the quantity of gasoline is measured in gallons and the price of gasoline is measured in dollars. The price elasticity of demand is 0.67. If the price of gasoline was now measured in cents rather than dollars, the price elasticity of demand would now be

If at a given moment, no matter what the price, producers cannot change the quantity supplied, the momentary supply

When we calculate the price elasticity of demand, we use percentages of the average price and the average quantity in order to get the same value for the elasticity regardless of whether the price falls or rises.