Exam 4: Elasticity

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles, using the midpoint method, what is the price elasticity of demand for suntan lotion?

-The above figure illustrates the demand curve for a good. The good has

-Steve sells hotdogs from a vending cart downtown. The table above shows his total revenue per day at four different prices. Between which two prices is the demand for hotdogs a) elastic? b) unit elastic? c) inelastic?

As Mary's income increases by 20 percent, her demand for tickets to National Hockey League games increases by 10 percent. Mary's demand for tickets is income ________; for Mary, hockey tickets are ________ good.

-Cory enjoys listening to all types of music. His demand schedules for CDs in 2009 and 2010 are shown in the table above. Cory's income was $30,000 in 2009 and $35,000 in 2010. In 2010, he bought an iPad so he started to download music files from the Internet. a) Draw Cory's demand curves for CDs in 2009 and 2010. How did Cory's demand for CDs change? Why? b) For each year, calculate Cory's price elasticity of demand as the price of CDs decreases from $16 to $12. (Use the midpoint method in your calculations.) c) Why might the price elasticity of Cory's demand for CDs in 2010 be different from that in 2009? d) If all CD buyers have the same demand as does Cory, what price should the record companies charge in 2010 to maximize their total revenue from CD sales?

Because Product X has a large positive income elasticity, it is likely that the product

The ________ the portion of your income spent on a good, the ________ is your demand for the good.

Last year in the United States, the price of snowboards rose by 5 percent and the price rise resulted in a 15 percent increase in the quantity supplied. This outcome is an indication that

When consumers' incomes increased 10 percent, the quantity of milk bought increased 5 percent. This result means

If a small percentage decrease in the price of chocolate causes a larger percentage decrease in the quantity supplied, the

If the price elasticity of demand for a product equals 1, as its price rises the

Because of an increase in the price of leather, the price of a pair of women's dress shoes increased 12 percent. If the price elasticity of demand for women's dress shoes is 0.85, which of the following will happen?

One year, the government boosted regulated taxi fares in New York City by 15 percent with the expectation that the total revenue from taxi rides would also increase by 15 percent. The taxi commission that authorized this fare increase must have believed that the demand for taxi service was

When the price of Ford pickup trucks rises from $18,000 to $19,000, the quantity of Chevy trucks demanded increases from 112,000 to 144,000. What is the cross elasticity of demand between Ford and Chevy trucks?

When the price of milk goes up as a result of a rightward shift of the demand curve for milk, the total revenue collected by milk producers will

Specialty chocolate bars with a high cocoa content have been drawing a lot of attention in gourmet circles in 2008 but the price of cocoa beans has increased more than 44 percent in this time period. In response to the increase in the price of cocoa beans, Rogue Chocolatier has increased the price of their gourmet chocolate bars by 20 percent. Rogue observes the quantity of their bars sold decreased by 15 percent. This means the price elasticity of demand for gourmet chocolate bars is ________.

What are the three cases for the price elasticity of demand? Briefly define each.

How are the cross elasticity of demand and income elasticity of demand similar and how are they different from the price elasticity of demand?

If the demand for KFC chicken is price elastic, a fall in the price of KFC chicken will raise the total revenue.

Netflix is the largest online DVD rental service offering flat rate online streaming to customers in the United States. Currently, there are approximately 8 million subscribers. Suppose Netflix decreases its flat rate rental by 10 percent and an additional 1 million people subscribe. This information means that Netflix's demand is