Exam 4: Elasticity: The Responsiveness of Demand and Supply

Suppose you have surveyed a few industries and obtained information about the income elasticity of demand for their products.If you expect that the economy is headed for a long recession, you would advise people to look for jobs in an industry with:

Explain the relationship between price elasticity of demand and total revenue. __________________________________________________________________________________________________________________________________________________________________________________________

Suppose that at a price of $55, 100 units were sold while at a price of $33, 153 units were sold.Without calculating the price elasticity value, can you determine whether demand is elastic, unit-elastic, or inelastic? Explain your answer. __________________________________________________________________________________________________________________________________________________________________________________________

Which of the following is a key determinant of the price elasticity of supply?

Which of the following goods would have the most inelastic demand?

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03.This means that________.

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, then an increase in tolls will result in:

If the market for a product is narrowly defined, then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

In the alcohol industry, both wine and spirits are considered to be substitutes for beer.

The item below likely to have the highest income elasticity of demand is:

Shifts in the supply of oil have caused large changes in price since the 1970s because:

At a price of $100, Beachside Canoe Rentals rented 11 canoes.When it increased its rental price to $125, 9 canoes were rented.Using the midpoint formula, what is the absolute value of the price elasticity of demand for canoe rentals?

Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Suppose a decrease in the supply of bottled water results in a decrease in revenue.What does this indicate?

What is the most important determinant of the price elasticity of demand for a good?

For people who live near a bus route, a subway station, or a commuter rail line, public transportation provides a substitute to driving their own cars.So, for these people, the cross-price elasticity of demand between petrol and public transportation is:

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21.This indicates that________.

If demand for a product is perfectly inelastic, a change in price will not change total revenue.

The price elasticity of an upward-sloping supply curve is always________.

The product below which comes closest to having a perfectly inelastic demand is: