Exam 5: Elasticity and Its Application

Figure 5-16 -Refer to Figure 5-16.Which supply curve represents perfectly inelastic supply?

A perfectly elastic demand implies that

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

OPEC failed to maintain a high price of oil in the long run,partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

When consumers face rising gasoline prices,they typically

The demand for Rice Krispies is more elastic than the demand for cereal in general.

Last month,sellers of good Y took in $100 in total revenue on sales of 50 units of good Y.This month sellers of good Y raised their price and took in $120 in total revenue on sales of 40 units of good Y.At the same time,the price of good X stayed the same,but sales of good X increased from 20 units to 40 units.We can conclude that goods X and Y are

Scenario 5-3 Milk has an inelastic demand and beef has an elastic demand.Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-3.The equilibrium quantity will

You are in charge of the local city-owned golf course.You need to increase the revenue generated by the golf course in order to meet expenses.The mayor advises you to increase the price of a round of golf.The city manager recommends reducing the price of a round of golf.You realize that

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price,and elastic if the quantity supplied responds only slightly to price.

As price elasticity of supply increases,the supply curve

Holding all other factors constant and using the midpoint method,if a pencil manufacturer increases production by 20 percent when the market price of pencils increases from $0.50 to $0.60,then supply is

When demand is elastic,an increase in price will cause

For a horizontal demand curve,

Suppose that when the price of good X falls from $10 to $8,the quantity demanded of good Y rises from 20 units to 25 units.Using the midpoint method,

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 0.75.Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

Get Smart University is contemplating an increase in tuition to enhance revenue.If GSU feels that raising tuition would enhance revenue,it is

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

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

Table 5-4 -Refer to Table 5-4.Demand is unit elastic when quantity demanded changes from