Exam 4: Elasticity

Suppose that a new drug has been approved to treat a life-threatening disease.Demand for that drug is shown on the graph below.Prior to approval of this drug,the only treatment for this condition was non-prescription pain relief.Demand for one brand of non-prescription pain reliever is also shown on the graph below. Refer to the figure above.If the manufacturer of the new drug chose to increase its price from $90 to $100,consumers would acquire ______ doses,and have _____ total expenditures.

Suppose the price P on a given demand curve results in a price elasticity of demand equal to 1.Any price higher than P will lie on the _______ part of the demand curve,and any price lower than P will lie on the _______ part of the demand curve.

Economists have found that the price elasticity of demand for water is higher in the summer than in the winter.Why?

As one moves down along a linear demand curve (i.e. ,from high price,low quantity pairs to low price,high quantity pairs),the demand:

An increase in the price of hamburger from $3 to $4 leads to an increase in quantity supplied from 100 units to 150 units.At the original price,the price elasticity of supply for hamburgers is _____ and at this point the supply curve is _______.

You have found data that indicates that the income elasticity of demand for generic (unbranded)shampoo is -0.7.You conclude that generic shampoo:

If the quantity demanded of a good is Q when the price for the good is P,the price elasticity of demand for that good at that point is:

Suppose the demand curve for open-heart surgery is vertical among people with serious heart conditions.Therefore,demand for open-heart surgery is _____ with respect to price.

Assume the price of gasoline doubles tonight and remains at that price for the next two years.The short-term price elasticity of demand for gasoline will be ______ when compared with the long-term price elasticity of demand for gasoline.

If the price elasticity of demand for a good is greater than one,then the demand for that good,with respect to price,is:

If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent,then the price elasticity of demand has a value of:

At the midpoint of a straight-line demand curve,the price elasticity of demand is always:

A cross-price elasticity of -1.2 indicates that the two goods under consideration are:

A pizza shop observes that when it raises the price of the large pizza,total revenue from pizza decreases and when they lower the price of the large pizza,total revenue increases.This suggests that:

Lakeville is a small community that completely surrounds a scenic lake up north.Lakeville's zoning regulations require that residential lots have at least one hundred feet of frontage,or shoreline,on the lake.The total shoreline of the lake is 5,000 feet. There are currently 40 homes on the lake.If demand for lakefront property in Lakeville increased,

If the percentage change in the price of a good is less than the percentage change in the quantity demanded of that good then the demand for that good,with respect to price,is:

Demand tends to be _______ in the short run than in the long run.

Suppose that Chris had been charging $1.00 per pound for potatoes.When Chris lowered the price to $0.90 per pound,total revenue fell.When Chris raised the price to $1.10,total revenue also fell.Why?

Elvis loves to eat peanut butter with bananas.Martha thinks the combination of peanut butter and bananas is repulsive.Therefore,economists would classify peanut butter and bananas as:

If a 10% decrease in the price of good leads to a 20% increase in the quantity demanded of that good,the price elasticity of demand for that good would be: