Exam 5: Elasticity: a Measure of Response

Use the following for questions 163-168. Exhibit: Johnson's Income and Expenditures Quantity Purchased per Month -(Exhibit: Johnson's Income and Expenditures) For Johnson, magazines are a(n):

The income elasticity of demand for ground beef has been estimated to be -0.197.If income falls by 20 percent in a period, how will that affect total expenditures on ground beef in that period, all other things unchanged?

Explain why there is a total revenue test for the price elasticity of demand, but there is no total revenue test for price elasticity of supply.

A curve whose price elasticity of demand is the same at every point is:

If the price elasticity of supply is less than 1, then supply is:

Suppose that the price elasticity of demand for grapefruit is -2.8.The introduction of a new variety that is cheaper to grow should cause consumer expenditures for grapefruit to:

Use the following for questions 108-115. Exhibit: The Demand for Bungalow Bob's Bagels -(Exhibit: The Demand for Bungalow Bob's Bagels) Total revenue increases if the price ________ from ________.

Given an inelastic demand for agricultural output, a decrease in supply will lead to an increase in farm income (taken collectively).

If the demand for golf is unit price elastic and your local public golf course increases the greens fees for using the course, you would expect:

If a 5 percent reduction in the price of a commodity results in a 3 percent increase in the quantity demanded, demand is said to be:

If a decrease in the price of a good causes an increase in total revenue, the demand for the good is price inelastic.

If income decreases and the consumption of a certain good increases, that good is considered a(n):

Use the following for questions 128-130. Exhibit: Nonlinear Demand Curve -(Exhibit: Nonlinear Demand Curve) The values for quantity demanded along this nonlinear demand curve are given by the formula Q = 24/P.It:

An important determinant of the price elasticity of demand is the:

An important determinant of elasticity is the availability of substitutes.

If the demand for a good is price elastic in comparison to one that is price inelastic, then:

If the price of chocolate-covered peanuts decreases from $1.05 to $0.95 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

If the price elasticity of supply is greater than 1, then:

If demand is price elastic, it is certain that:

A constant price elasticity of demand curve is one whose: