Exam 6: Elasticity: The Responsiveness of Demand and Supply

The price elasticity of supply for umbrellas is 2.Suppose you're told that following a price increase,quantity supplied increased by 30 percent.What was the percentage change in price that brought this about?

Jaycee Jeans sold 40 pairs of jeans at a price of $40.When it lowered its price to $20,the quantity sold increased to 60 pairs.Calculate the absolute value of the price elasticity of demand.Use the midpoint formula.

Suppose the California Nurses Union successfully secured a 12 percent increase in the wages of registered nurses.If a hospital responds by reducing the quantity of registered nurses hired and increasing the quantity of physician's assistants hired,what conclusion can you draw?

Economists estimated that the price elasticity of beer is -0.23 and the income elasticity of beer is -0.09.This means that

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

Suppose the price elasticity of demand for cigarettes is -0.4.The FDA decides to regulate tobacco production,which increases the price of cigarettes and causes the quantity of cigarettes demanded to decrease by 25 percent.What is the percentage increase in price which would lead to the 25 percent decrease in quantity demanded? If the price elasticity was -4,what would be the percentage increase in price?

If,when price changes by 35 percent,the quantity demanded changes by 7 percent,then the absolute value of the price elasticity of demand is 5.

Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result,CineArts Videos experienced a 16 percent decline in its movie club membership.What is the value of the cross-price elasticity between the two movie club memberships?

When there are few substitutes available for a good,demand tends to be relatively inelastic.

Between 1950 and 2011 the number of acres devoted to wheat production in the United States ________ and the price of wheat ________.

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

What factors would make you more sensitive or less sensitive to price when purchasing gasoline?

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

For people who live near a bus route,a subway station,or a commuter rail line,public transportation provides a substitute to driving their own cars.So,for these people,the cross-price elasticity of demand between gasoline and public transportation is

Suppose the current price of oil is $90 a barrel and the quantity supplied is 800 million barrels per day.If the price elasticity of supply for oil in the short run is estimated at 0.5,use the midpoint formula to calculate the percentage change in quantity supplied when the price of oil rises to $98 a barrel.

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

Firms estimate the price elasticity of demand for new products by conducting market experiments in which firms try different prices and observe the resulting change in quantity demanded.

Jonah lives in a small town where there is only one Mexican restaurant.Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?

Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

Suppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a good.Calculate the income elasticity of demand for the good and determine what type of good it is.