Exam 5: Elasticity: a Measure of Response

The income elasticity of demand for peaches has been estimated to be 1.43.If income grows by 15 percent in a period, how will that affect demand for peaches in that period, all other things unchanged?

If the income elasticity of demand for a good is positive, the good is said to be a(n):

Define, identify and explain the differences among price elasticity of demand, price elasticity of supply, income elasticity of demand, and cross price elasticity of demand.

The pair of items that is most likely to have a negative cross price elasticity of demand is:

If the income elasticity of demand for a good is negative, the good is said to be a(n):

The cross price elasticity of demand for fuel with respect to the price of transport (e.g., automobile travel including insurance, etc.) has been estimated to be -0.48.If the price of transport falls by 10 percent in a period, how will that affect the demand for fuel in that period, all other things unchanged?

Use the following to answer question(s): Demand for Shirts -(Exhibit: Demand for Shirts) The price elasticity of demand for the segment AB is:

The price elasticity of demand for peanuts has been estimated to be -0.38.If an insect infestation destroys 20 percent of the nation's peanut crop, how will that affect total expenditures on peanuts, all other things unchanged?

When the percentage change in quantity demanded is less than the percentage change in price:

The cross price elasticity of demand of unrelated goods:

If the percentage change in quantity demanded divided by the percentage change in price is:

A price elastic demand exists if a 10 percent change in the price of a good results in a percentage change (in absolute value terms) in quantity demanded that is:

If people purchase less of a good when their incomes go down, the good is an inferior good.

Use the following for questions 124-127. Exhibit: Estimating Price Elasticity -(Exhibit: Estimating Price Elasticity) Between the two prices, P₁ and P₂, which demand curve has the highest price elasticity (absolute value)?

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

If demand is price elastic, a decrease in price will result in an increase in total revenue.

If a good has a price inelastic demand, then which of the following is not likely to be characteristic of this good?

Assume the supply curve shifts to the right by a given amount at each price.Price in the market will decline the most if demand is more:

A linear demand curve:

An upward movement along a linear demand curve from lower prices to higher prices will result in: