Exam 6: Elasticity: The Responsiveness of Demand and Supply

If,for a given percentage increase in price,quantity demanded falls by a proportionately smaller percentage,then demand is

Table 6-2 The publisher of a magazine gives his staff the following information: He tells the staff, "Our costs are currently $150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to $3.00 per issue. This will result in our revenue being exactly equal to our cost." -Refer to Table 6-2.Which of the following statements is correct?

Suppose the absolute value of the price elasticity of demand for meals at Fortune Buffet House is ∞.What happens to sales revenue if the restaurant increases its price by 5 percent?

Figure 6-5 -Refer to Figure 6-5.Identify the two goods which are substitutes.

In May 2011,the average price of gasoline in the United States was $3.76 per gallon and consumers bought 5 percent less gasoline than they had during May 2010,when the average price was $2.79 per gallon.Based on these numbers,what was the price elasticity of demand for gasoline from May 2010 to May 2011?

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?

Consider the following pairs of items: a.shampoo and conditioner b.iPhones and earbuds c.a laptop computer and a desktop computer d.beef and pork e.air-travel and weed killer Which of the pairs listed will have a negative cross-price elasticity?

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

Using cross-sectional data from the two Housing Assistance Supply Experiment (HASE)sites--Brown County,Wisconsin,and St.Joseph County,Indiana,John Mulford of Rand Research estimates that the long-run "permanent" income elasticity of housing expenditures to be 0.45 for owners.Using this information,what is likely to happen to housing expenditures if the government increases income transfers to recipients in HASE sites?

Figure 6-1 -Refer to Figure 6-1.The demand curve on which elasticity changes at every point is given in

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

Figure 6-7 -Refer to Figure 6-7.What is the value of the price elasticity of supply between g and h?

A demand curve that is horizontal indicates that the commodity

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

Figure 6-6 -Refer to Figure 6-6.The supply curve on which price elasticity changes at every point is shown in

According to an article in the Wall Street Journal,unlike airlines,even elite hotels don't have sophisticated systems that can react quickly to changes in demand.Even if they could,many hoteliers say people don't respond that much to lower rates."We've tested this,cutting our rates by $50 [per night],and we didn't see an appreciable response in occupancy," says Jim Schultenover,a vice president for Ritz-Carlton. Source: Jesse Drucker,"In Times of Belt-Tightening,We Seek Reasonable Rates," Wall Street Journal,April 6,2001. Based on the information above,the demand for hotel rooms is

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.

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 you expect the economy is going to boom and average income in the economy will rise in the foreseeable future,the type of firm that would be able to increase its sales if your expectations are met is

For consumers who opt to pay a $10 monthly fee to have unlimited texting on their cell phones,but choose not to pay a $5 monthly fee to have unlimited call minutes,the unlimited texting option has a ________ than the unlimited minutes option.