Exam 6: Elasticity: The Responsiveness of Demand and Supply

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?

If the demand for cell phone service is inelastic,then

If at a price of $24,Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids,the demand for her orchids is

Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil?

Suppose the governor of California has proposed increasing toll rates on California's toll roads,and has presented two possible scenarios to implement these increases.Following are projected data for the two scenarios for the California toll roads: Scenario 1: Toll rate in 2012: $10.00.Toll rate in 2016: $22.50 For every 100 cars using the toll roads in 2012,only 81.6 cars will use the toll roads in 2016. Scenario 2: Toll rate in 2012: $10.00.Toll rate in 2016: $17.50 For every 100 cars using the toll roads in 2012,only 96.2 cars will use the toll roads in 2016. a.Using the midpoint formula,calculate the price elasticity of demand for Scenario 1 and Scenario 2. b.Assume 10,000 cars use California toll roads every day in 2012.What would be the daily total revenue received for each scenario in 2012 and in 2016? c.Is demand under Scenario 1 and under Scenario 2 price elastic,inelastic,or unit elastic.Briefly explain. (For above questions,assume that nothing other than the toll change occurs during the time frame listed that would affect consumer demand.)

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

If at a price of $10,a vendor sells 5 units of a product and at a price of $8,6 units are sold,then,using the midpoint formula,the demand for this good is inelastic.

If an 8 percent decrease in the price of lobster leads to a 15 percent decrease in the quantity supplied of lobster,then the supply of lobster is

Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Necessities tend to have more inelastic demands than luxuries.

If a 5 percent increase in income leads to a 10 percent increase in quantity demanded for airline travel,then airline travel is

In general,a "big ticket item" such as a house or new car will

Price elasticity of supply is used to gauge

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

Briefly explain the economic concept of elasticity.

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

An increase in the demand for green tea raises the price of apples from $16 a pound to $20 a pound.As a result,quantity supplied increases by 30 percent.Using the midpoint formula,calculate the value of the price elasticity of supply?

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03.This means that

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50,the quantity demanded falls from 800 to 600 reams per day.Using the midpoint formula,what is the price elasticity of demand (in absolute value)over this range?

Which of the following is a key determinant of the price elasticity of supply?