Exam 6: Elasticity: The Responsiveness of Demand and Supply

Assume that a 50 percent gasoline tax led to a large increase in its price and only a small decrease in the quantity of gasoline demanded.Economic analysis would lead one to conclude that

Over longer periods of time,increases in oil prices provide firms with incentives to explore and recover oil.What does this indicate about the long run price elasticity of supply for oil?

Jenna runs a small boutique in Capitola.She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more.On the basis of this information,what can you conclude about her price elasticity of demand for wool hand warmers?

Figure 6-3 -Refer to Figure 6-3.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.

Figure 6-11 -Refer to Figure 6-11.What is the value of the price elasticity of supply between g and h?

The demand for gasoline is perfectly inelastic because most people need gasoline to drive their cars.

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 statements is true?

Suppose the demand curve for a product is represented by a typical downward-sloping curve.Now suppose the demand for this product decreases.Which of the following statements accurately predicts the resulting decrease in price?

Which of the following statements is true about the price elasticity of demand along a downward sloping linear demand curve?

If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded,then the demand for golf balls is

The price elasticity of demand is equal to

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

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?

The paradox of American farming is

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

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

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

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

If the absolute value of the price elasticity of demand for DVD movies is 0.8 then the elasticity of demand for the DVD for the movie The Hangover should be