Exam 5: Elasticity and Its Application

At price of $1.30 per pound,a local apple orchard is willing to supply 150 pounds of apples per day.At a price of $1.50 per pound,the orchard is willing to supply 170 pounds of apples per day.Using the midpoint method,the price elasticity of supply is about

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

Demand is elastic if the price elasticity of demand is

If we observe that when the price of chocolate increases by 10%,total revenue increases by 10%,then the demand for chocolate is unit price elastic.

Scenario 5-2 The supply of aged cheddar cheese is inelastic,and the supply of bread is elastic.Both goods are considered to be normal goods by a majority of consumers.Suppose that a large income tax increase decreases the demand for both goods by 10%. -Refer to Scenario 5-2.The equilibrium price will

Consider the following pairs of goods.For which of the two goods would you expect the demand to be more price elastic? Why? a. water or diamonds b. insulin or nasal decongestant spray c. food in general or breakfast cereal d. gasoline over the course of a week or gasoline over the course of a year e. personal computers or IBM personal computers

In the market for oil in the short run,demand

Demand is said to be price elastic if

Which of the following is likely to have the most price elastic demand?

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 change in equilibrium price will be

Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

If soybean farmers know that the demand for soybeans is price inelastic,in order to increase their total revenues they should

Cross-price elasticity is used to determine whether goods are substitutes or complements.

There are fewer farmers in the United States today than 200 years ago because of

If the price elasticity of supply is 1.2,and a price increase led to a 5% increase in quantity supplied,then the price increase is about

Holding all other forces constant,if decreasing the price of a good leads to an increase in total revenue,then the demand for the good must be

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

As price elasticity of supply increases,the supply curve

If the cross-price elasticity of two goods is positive,then the two goods are

In which of the following situations will total revenue increase?