Exam 4: Elasticity: the Responsiveness of Demand and Supply

Assume that the market for barley is in equilibrium and the demand for barley is inelastic.Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley.The drought will cause farm revenue to

Suppose a 4 per cent increase in income results in a 2 per cent decrease in the quantity demanded of a good.Calculate the income elasticity of demand for the good and determine what type of good it is.

If demand is inelastic,the absolute value of the price elasticity coefficient is greater than one.

Suppose the demand curve for hybrid cars shifts to the right.This will cause a relatively small increase in the price of hybrid cars if

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1.Increasing ticket prices will increase the total revenue from ticket sales.

The cross-price elasticity of demand between Coca-Cola and Pepsi-Cola is calculated by dividing

Which of the following statements is true?

Figure 4-1 -Refer to Figure 4-1.The demand curve on which elasticity changes at every point is given in

If a firm raised its price and discovered that its total revenue fell,then the demand for its product is

Suppose the cross-price elasticity of demand between grapefruit juice and orange juice is approximately 6.What does this mean?

If,for a given percentage increase in price,quantity supplied increases by a proportionately larger percentage,then supply is

The demand for most farm products is relatively inelastic.A drought that reduces the supply of farm products will also cause farm revenues to fall.

The price elasticity of an upward-sloping supply curve is always

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

Shifts in the supply of oil have caused large changes in price since the 1970s because

A demand curve which is ________ represents perfectly inelastic demand,and a demand curve which is ________ represents inelastic demand.

In order to prove that Motrin and Ibuprofen are substitutes,one should measure the ________ and get a ________.

In general,a 'big ticket item' such as a house or new car will

If the demand for mobile phone service is inelastic,then

Holding everything else constant,the demand for a good tends to be more elastic