Exam 6: Elasticity: the Responsiveness of Demand and Supply

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

The demand for The Federalist Papers is likely to be more elastic than the demand for a best-selling mystery novel.

Which of the following explains why a firm would be interested in the knowing the price elasticity of demand for a good it sells?

Figure 6-4 -Refer to Figure 6-4. The inelastic segment of the demand curve

Suppose at the going wage rate of $20 per hour, firms can hire as many hours of janitorial services as it desires. If any firm tries to lower the wage rate to $19, it will not be able to hire any janitor. What does this indicate about the supply curve for janitorial services?

With the increased usage of cell phone services, what has happened to the price elasticity of demand for land-line telephone services?

Figure 6-1 -Refer to Figure 6-1. A perfectly inelastic demand curve is shown in

If the market for a product is narrowly defined, then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

Figure 6-4 -At a price of $100, Beachside Canoe Rentals rented 11 canoes. When it increased its rental price to $125, 9 canoes were rented. Calculate the absolute value of the price elasticity of demand for canoe rentals, using the midpoint formula.

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03. This means that

Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Figure 6-12 -Refer to Figure 6-12. The diagram shows two supply curves, SA and SB. As price rises from P0 to P1, which supply curve is more elastic?

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

Suppose when Nablom's Bakery raised the price of its breads by 10 percent, the quantity demanded fell by 15 percent. What was the effect on sales revenue?

If the absolute value of the price elasticity of demand for gasoline is 0.5, then a 10 percent increase in the price of gasoline leads to a 0.5 percent decrease in the quantity demanded.

In the alcohol industry, both wine and spirits are considered to be substitutes for beer.

Between 1950 and 2013 the number of acres devoted to wheat production in the United States ________ and the price of wheat ________.

Between 1950 and 2013, the productivity of wheat farmers in the United States more than doubled. This means that

Briefly explain the economic concept of elasticity.

If a 5 percent increase in income leads to a 10 percent decrease in quantity demanded for a product, this product is