Exam 6: Elasticity: the Responsiveness of Demand and Supply

Figure 6-4 -If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded, then the demand for golf balls is

During an economic expansion as consumer incomes rise, holding everything else constant,

Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic. She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor. If I wanted to buy a mystery novel I would have many authors to choose from. Therefore, the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct?

Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

Suppose you have surveyed a few industries and obtained information about the income elasticity of demand for their products. If you expect that the economy is headed for a long recession, you would advise people to look for jobs in an industry with

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, demand for using the toll road must be

Article Summary Based on resale prices for tickets for the 2013 Super Bowl in New Orleans, face-value prices for the most expensive tickets to the 2014 game are expected to more than double, with significant price increases for lesser-valued tickets as well. Evidence indicates that sports teams are more interested in maximizing attendance instead of ticket revenue, since greater attendance means more spending on items such as parking and concessions. Higher ticket prices in secondary markets seem to verify that teams are charging less than they could be if their goal was to maximize ticket revenue. Source: Patrick Rishe, "Super Bowl XLVIII Pricing: A Lesson In Demand Elasticity," Forbes, September 19, 2013. -Refer to the Article Summary. How would sports teams know if they were operating on the elastic portion of the demand curve for tickets?

Figure 6-7 -Refer to Figure 6-7. Between points a and b on the demand curve, demand is

If the cross-price elasticity of demand between Breeze Detergent and Faber Detergent is a relatively large positive number, then it indicates that

Ali's Gyros operates near a college campus. Ali has been selling 120 gyros a day at $4.50 each and is considering a price cut. He estimates that he would be able to sell 200 gyros per day at $3.50 each. a. Calculate the price elasticity of demand using the midpoint formula. b. Calculate the change in revenue as a result of the price cut.

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product.

The value of the price elasticity of supply depends primarily on how quickly firms can acquire inputs to increase quantity supplied when price increases.

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

Figure 6-11 -If, for a given percentage increase in price, quantity supplied increases by a proportionately larger percentage, then supply is

Which of the following products comes closest to having a perfectly inelastic demand?

If the cross-price elasticity of demand between beer and wine is 0.31, then beer and wine are

Which of the following correctly comments on the following statement? "The only way to increase the revenue from selling a product is to increase the product's price."

Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09. This means that

The price elasticity of demand for Kellogg's Raisin Bran is larger in absolute value than the price elasticity for all breakfast cereals.

Which of the following could explain why the demand for table salt is inelastic?