Exam 5: Elasticity and Its Applications

On June 14, 2011, the Delaware Senate approved a gun buyback program. The yearlong program would authorize the state to pay $100 for every gun turned over to police. What sort of guns should Delaware officials expect to get if this plan becomes law?

Since the demand for illegal drugs is quite inelastic, an increase in the price of illegal drugs:

Why is the war on drugs hard to win?

How does the price elasticity of supply for Henri Matisse paintings compare with the price elasticity of supply for Damien Hirst paintings? Note that Matisse is deceased, whereas Hirst still lives.

Figure: Price Elasticity of Supply Refer to the figure. Compared to S₁, S₂ is more:

In The Beautiful Tree, Dr. James Tooley describes how he found, in developing country after developing country, countless private schools aimed at educating the poor's children. The schools are completely self-funded, relying on tuition to pay salaries and upkeep. Although the teachers are effective, the schools are very basic: large playgrounds and modern building construction are very rare. Based on this information, what is the elasticity of the supply of schools?

The demand curve is inelastic if the absolute value of the elasticity is:

Use the midpoint method to answer this question. When a good's price increases from $20 to $25 and its quantity demanded decreases from 100 to 75, the elasticity of demand for that good is:

If a 4 percent increase in the price of pepper results in a 1 percent decrease in pepper sales, what is the absolute value of the price elasticity of demand for pepper? Is it elastic or inelastic?

The per-unit cost of producing Tic Tac candy does not change with increases in production, which means the:

Table: Elasticities Which column in the table is correct?

For each of the following goods would you expect the supply to be elastic or inelastic? Provide explanation for each of your rationales. a. oil b. toothpicks c. Picasso paintings.

If the absolute value of the price elasticity of demand for a good is 1.5, the good has a(n):

Figure: Elasticity and Revenue Refer to the figure. When the price of the product rises from $4 to $6, the total revenue changes by the area(s) represented by:

Demand for a specific brand ______ demand for the corresponding product category.

The supply curve for manufactured goods is usually more elastic than raw materials because production of manufactured goods can often be:

Assume that demand decreases by 3 percent, the absolute value of price elasticity of demand is 1.0, and price elasticity of supply is 1.0. What is the percentage price change in this case?

The elasticity of supply measures:

The demand curve for oil is inelastic, meaning that the quantity of oil demanded:

Necessities tend to have a(n) ______ demand than luxuries.