Exam 6: Elasticity: The Responsiveness of Demand and Supply

In recent years,the prices of new domestically produced cars have been falling.Suppose consumers respond by reducing their demand for used cars and mass transport services such as bus travel.This information suggests that the cross-price elasticity between new cars and used cars,and the cross-price elasticity between new cars and bus travel are negative.

Which of the following is one reason why the income of small family farms has decreased over time?

If a firm's goal is to maximize revenue,it will price its product to correspond to the unit-elastic segment of its demand curve.

The price elasticity of supply is equal to

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?

The demand for all carbonated beverages is likely to be ________ the demand for Dr.Pepper.

If demand is perfectly inelastic,the absolute value of the price elasticity of demand is

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3,then quantity demanded

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 cross-price elasticity of zero?

Price elasticity of supply is used to gauge

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

Figure 6-4 -Refer to Figure 6-4.At the midpoint of the demand curve,in absolute value,

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

For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value). a.Insulin for a diabetic or aspirin for someone suffering a headache. b.A new Whirlpool 27 cu.ft.side-by-side refrigerator or electricity to power your all-electric home. c.A can of Red Bull or soft drinks in general.

The demand for most farm products is relatively inelastic.All else constant,what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases in productivity?

Which of the following goods would have the most inelastic demand?

Suppose a decrease in the supply of bottled water results in a decrease in revenue.This indicates that

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a ton to $180 a ton and quantity sold decreased from 800 tons to 240 tons.What is the absolute value of the price elasticity of demand?

Figure 6-6 -Refer to Figure 6-6.A perfectly elastic supply curve is shown in

Seth is a competitive body builder.He says he has to have his 12-oz package of protein powder to "feed his muscles" every day.On the basis of this information,what can you conclude about his price elasticity of demand for protein powder?