Exam 4: Elasticity: The Responsiveness of Demand and Supply

When is demand perfectly elastic? When is demand perfectly inelastic? What are the values of the price elasticity of demand when demand is perfectly elastic or perfectly inelastic? What do perfectly elastic and perfectly inelastic demand curves look like? __________________________________________________________________________________________________________________________________________________________________________________________

Suppose when the price of jean-jackets increased by 10 per cent, the quantity supplied increased by 16 percent.Based on this information the price elasticity of supply of jean-jackets is:

If the demand for a steak is unit-elastic, then________.

The price elasticity of supply for umbrellas is 2.Suppose you are told that following a price increase, quantity supplied increased by 30 per cent.What was the percentage change in price that brought this about?

Figure 4.9 -Refer to Figure 4.9.The diagram shows two supply curves, S_A and S_B.As price rises from P₀ to P₁, which supply curve is more elastic?

Supply is elastic whenever the elasticity value for supply is positive and greater than 1.

Table 4.1 -Refer to Table 4.1.Suppose you own a bookstore.You believe that you can sell 40 copies per day of the latest John Grisham novel when the price is $35.You consider lowering the price to $25 and believe this will increase the quantity sold to 50 books per day.Compute the price elasticity of demand using the mid-point formula and these data.Select the correct implication from your work.

Which of the following statements is true about the price elasticity of demand along a downward-sloping linear demand curve?

A linear downward-sloping demand curve has price elasticities (in absolute values)that________.

The price elasticity of demand for Stork ice cream is -4.Suppose you are told that following a price increase, quantity demanded fell by 10 per cent.What was the percentage change in price that brought about this change in quantity demanded?

The price elasticity of supply is usually a positive number because:

Suppose when Nablom's Bakery raised the price of its breads by 10 per cent, the quantity demanded fell by 15 per cent.What was the effect on sales revenue?

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? Use the midpoint formula.

Which of the following could explain why the demand for table salt is inelastic?

At a price of $8 per dozen, Chuy sells 40 dozen homemade tamales per week.When he raised his price to $12 per dozen, he still sold 40 dozen per week.Based on this information, the demand for his tamales is:

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit elastic? __________________________________________________________________________________________________________________________________________________________________________________________

If the demand for a product is elastic, the quantity demanded changes by a smaller percentage than the percentage change in price.

Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil?

Suppose the value of the price elasticity of supply is 4.What does this mean?

Consider the following types of demand curves: a.a vertical demand curve b.a horizontal demand curve c.a linear downward-sloping demand curve Which of the demand curves listed exhibits a price elasticity of demand coefficient that remains constant along the demand curve?