Exam 5: Elasticity and Its Applications

Figure: Demand 2 In the figure where S₁ is the supply of drugs with no prohibition and S₂ is the supply of drugs with prohibition, the area that represents total revenue with drug prohibition is ______, and the area that represents total revenue with no prohibition is ______.

Which statement is TRUE of the Sudanese slave trade and the actions of human rights groups?

The manager of a company notices that the company's total revenue would increase if she raised the price of the company's product. Accordingly, the manager can assert that the demand for the company's product is:

Demand for necessities is elastic, while demand for luxuries is inelastic.

Figure: Supply Elasticity Refer to the figure. Which one of the four supply curves has the greatest responsiveness to price changes?

If the supply of raw materials is ________, increasing their production leads to ________ per-unit costs.

The elasticity of demand measures:

If the price elasticity of demand for a product is 2 in absolute value, and the price elasticity of supply for the same product is 1, what is the predicted percent change in price from a 5 percent fall in the supply?

Increases in farm productivity have lowered the prices of many agricultural products. Farm revenues decreased, which implies that the:

If demand is inelastic then an increase in price would cause a _____ in the quantity demanded and a(n) _____ in total revenue:

Table: Supply Curve In the table, which supply curve is most price elastic over the range of prices considered?

The elasticity of demand measures:

If gasoline prices remain high long enough, people will arrange to do more telecommuting. This would be an example of why the elasticity of:

Operating along the elastic portion of a linear demand curve, revenue rises with price.

Consistent with economic logic, gun buyback programs have been very effective in reducing the number of guns in a city.

A cross-price elasticity value that is positive will indicate goods that are substitutes.

The most important determinant of the elasticity of demand is the:

Which of the following probably has the least elastic demand?

The fundamental determinant of the elasticity of demand for a good is:

The fundamental determinant of the elasticity of supply is how quickly per-unit costs increase with an increase in production.