Exam 6: Elasticity

Suppose that a 20 percent increase in the price of normal good Y causes a 10 percent decline in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is

Blossom, Inc., sells 500 bottles of perfume a month when the price is $7. A huge increase in resource costs forces Blossom to raise the price to $9, and the firm only manages to sell 460 bottles of perfume. Using the midpoint formula, the price elasticity of demand coefficient is

Which of the following statements is not correct?

The price elasticity of supply determines how much price would change as a result of a change in demand.

If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will increase quantity demanded by

If the government imposes an excise tax on a good, it will collect the most tax revenues from it if the demand for the good is

A price increase from $43 to $49 results in an increase in quantity supplied from 220 units to 240 units. The price elasticity of supply in this price range is

Price elasticity of demand tends to be low for goods with few close substitutes.

Suppose that the price of product X rises by 20 percent and the quantity supplied of X increases by 15 percent. The coefficient of price elasticity of supply for good X is

If a college admits only a fixed number of applicants every year, then the school's supply curve for admissions is

Elasticity of supply will increase when

The coefficient of price-elasticity of supply for a product is 2 if

A perfectly inelastic demand curve

The cross elasticity of demand between Quaker State motor oil and Texaco motor oil is likely to be

The income elasticity of demand for jewelry is +2. Other things equal, a 10 percent increase in consumer income will