Exam 5: Elasticity and Its Application

What is the price elasticity of demand?

Suppose that 50 candy bars are demanded at a particular price. Using the midpoint method, if the price of candy bars rises by four per cent, the number of candy bars demanded falls to 46 candy bars. This means that the:

A person who likes to be on the sea in a boat would tend to have what type of demand for boats?

Demand is unit elastic if elasticity is:

The demand for basic foodstuffs such as wheat is usually elastic.

Which of the following would you expect to have the highest income elasticity of demand?

Graph 5-2 -In Graph 5-2, the elasticity of demand from point B to point C, using the midpoint method, would be:

Table 5-2 Qualities purchased -Refer to Table 5-2. Using the midpoint method, what is the income elasticity of good Y?

Demand is elastic if the elasticity is greater than one.

Slope is the ratio of the changes in two variables, while elasticity is the ratio of the percentage changes in two variables.

Jean produces leather handbags. If the demand for leather handbags is inelastic and Jean wishes to increase her total revenue, she should:

If the price elasticity of demand is elastic, a price increase will actually reduce total revenue.

Price elasticity of supply is defined as the percentage change in quantity supplied divided by the percentage change in price.

The demand for rare butterflies tends to be income:

Graph 5-5 -In Graph 5-5, which supply curve is perfectly inelastic?

If the cross-price elasticity of demand is 1.25, then the two goods are:

Graph 5-1 -In Graph 5-1, the section of the demand curve labelled C represents the:

Suppose there is a change in the price of electricity. The demand for electricity will respond to this change less over the next month than over the next two years.

Economists use the concept of price elasticity of demand to measure how much:

A perfectly vertical demand curve means that demand is perfectly inelastic. The price elasticity of demand will be zero.