Exam 6: Elasticity: the Responsiveness of Demand and Supply

A service station owner in Staten Island, New York, was worried that raising the price of gasoline would cause the quantity demanded to fall by so much that he would be in a worse situation than if he did not raise the price. If raising the price of gasoline would cause the owner to receive less total revenue from the sale of gasoline, the demand for gasoline is

From 1950 to 2013, the number of people who lived on farms fell from 23 million to fewer than 3 million. Which of the following factors have contributed to this trend?

Table 6-2 -Refer to Table 6-2. Assume that an economist has estimated the price elasticity of demand values in the table above. Use the data in the table to select the correct statement.

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.

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

Table 6-7 The town of Bloomfield is well known for its basketball team. The price of basketball game tickets is determined by market forces. Table 6-7 above shows the demand and supply schedules for basketball games tickets. -Refer to Table 6-7. What is the numerical value of the price elasticity of supply?

Suppose the price of gasoline is $3.50 per gallon, the quantity of gasoline demanded is 150 billion gallons per year, the price elasticity of demand for gasoline is -0.06, and the federal government decides to increase the excise tax on gasoline by $1.00 per gallon, which increases the price of gasoline by $0.75 per gallon. What is the new equilibrium quantity of gasoline demanded after the tax is imposed?

If a good has a negative income elasticity of demand, this indicates that the good is

When Audrina raised the price of her homemade cookies, her total revenue increased. This suggests that the demand for Audrina's cookies is elastic.

If the quantity demanded for a good rises as income rises, then the income elasticity of demand for this good is ________ than 0, and the good is ________ good.

Cross-price elasticity of demand is calculated as the

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

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21. This indicates that

When demand is unit-elastic, a change in price causes total revenue to stay the same because

Income elasticity measures

Suppose the price of gasoline is $3.50 per gallon, the quantity of gasoline demanded is 150 billion gallons per year, the price elasticity of demand for gasoline is -0.06, and the federal government decides to increase the excise tax on gasoline by $1.00 per gallon, which increases the price of gasoline by $0.75 per gallon. How much revenue does the federal government receive from the tax?

If the slope of a demand curve is equal to -0.1 then

Which of the following items is likely to have the highest income elasticity of demand?

Table 6-7 The town of Bloomfield is well known for its basketball team. The price of basketball game tickets is determined by market forces. Table 6-7 above shows the demand and supply schedules for basketball games tickets. -Refer to Table 6-7. What is the most distinctive feature of the supply curve?

We should never assume that an inelastic demand curve is a perfectly inelastic demand curve because