Exam 5: Elasticity and Its Application

Table 5-3 The following table shows the demand schedule for a particular good. -Refer to Table 5-3.Using the midpoint method,what is the price elasticity of demand when price rises from $9 to $12?

When the price of a watch was $25 each,the jewelry shop sold 20 per month.When it raised the price to $35 each,it sold 14 per month.The price elasticity of demand for watches is about

If two goods are substitutes,their cross-price elasticity will be

For a good that is a necessity,

Eric produces jewelry boxes.If the demand for jewelry boxes is elastic and Eric wants to increase his total revenue,he should

Figure 5-8 -Refer to Figure 5-8.For prices below $5,demand is price

Elasticity of demand is closely related to the slope of the demand curve.The less responsive buyers are to a change in price,the

Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00.This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to

Suppose that an increase in the price of carrots from $1.30 to $1.80 per pound increases the quantity of carrots that carrot farmers produce from 1.2 million pounds to 1.6 million pounds.Using the midpoint method,what is the approximate value of the price elasticity of supply?

There are very few,if any,good substitutes for motor oil.Therefore,

Recently,in Smalltown,the price of Twinkies fell from $0.80 to $0.70.As a result,the quantity demanded of Ho-Ho's decreased from 120 to 100.What would be the appropriate elasticity to compute? Using the midpoint method,compute this elasticity.What does your answer tell you?

In the long run,the quantity supplied of most goods

Figure 5-14 -Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between $6 and $8?

When a supply curve is relatively flat,

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?

Which of the following statements is not valid when supply is perfectly elastic?

Demand is inelastic if the price elasticity of demand is greater than 1.

As we move downward and to the right along a linear,downward-sloping demand curve,

For which of the following goods is the income elasticity of demand likely highest?

If a firm is facing inelastic demand,then the firm should decrease price to increase revenue.