Exam 4: Elasticity: The Responsiveness of Demand and Supply

When the price of tortilla chips rose by 10 per cent, the quantity of tortilla chips sold fell 4 per cent, and the sale of dips (like salsa and bean dip) fell 8 per cent. This set of facts indicates that

-Refer to Figure 4-4. At the midpoint of the demand curve, in absolute value

Suppose a decrease in the supply of paper results in an increase in revenue. This indicates that

Over longer periods of time, increases in oil prices provide firms with incentives to explore and recover oil. What does this indicate about the long-run price elasticity of supply for oil?

Seth is a competitive body builder. He says he has to have his 12-oz package of protein powder to 'feed his muscles' every day. On the basis of this information, what can you conclude about his price elasticity of demand for protein powder?

Suppose the demand for milk is relatively inelastic. What happens to sales revenue if the government imposes a price floor above the free market equilibrium price in the market for milk?

Linesha, a university student working part-time, receives a wage increase. An avid movie buff, she increased her purchases of Blu-ray discs and reduced her purchases of DVDs. Based on this information,

If the demand for a product is elastic, the quantity demanded changes by a larger percentage than the percentage change in price.

If demand is inelastic, the absolute value of the price elasticity of demand is

Suppose the current price of oil is $90 a barrel and the quantity supplied is 800 million barrels per day. If the price elasticity of supply for oil in the short run is estimated at 0.5, use the midpoint formula to calculate the percentage change in quantity supplied when the price of oil rises to $98 a barrel.

Suppose the supply curve for digital cameras shifts to the right. This will cause a relatively large decrease in the price of digital cameras if both demand and supply are inelastic.

If at a price of $24, Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids, the demand for her orchids is

Carrie Bradshaw claims that when it comes to buying shoes, 'price is no object.' If this is true, then her demand for shoes is

The price elasticity of supply is equal to

If the price elasticity of demand for insulin is equal to zero then the demand curve for insulin is

The price elasticity of supply for umbrellas is 2. Suppose you're told that following a price increase, quantity supplied increased by 30 per cent. What was the percentage change in price that brought this about?

The price elasticity of supply measures

If a firm lowered the price of the product it sells and found that total revenue did not change, then the demand for its product is

If a firm's goal is to maximise revenue, it will price its product to correspond to the unit-elastic segment of its demand curve.

Along a downward-sloping, linear demand curve, total revenue is the greatest