Exam 6: Elasticity

Use the following to answer questions Figure: The Demand Curve -(Figure: The Demand Curve) Look at the figure The Demand Curve. Between prices $4 and $5, demand is _____, and total revenue will _____ if price increases.

The price elasticity of demand for ground beef has been estimated to be 1.0. If mad cow disease strikes the United States and a large percentage of the cattle are removed from the market, how will that affect total expenditures on ground beef, all other things equal?

The price elasticity of demand is computed as the percentage change in the _____ divided by the percentage change in _____.

The price elasticity of the supply of paintings by Rembrandt is greater than 1.

Assume the supply curve shifts to the right by a given amount at each price. The price in the market will decline the most if demand is more _____ and supply is more _____.

Use the following to answer questions Figure: The Market for Lattes -(Figure: The Market for Lattes) Look at the figure The Market for Lattes. What is the price elasticity of demand between $2 and $2.50 per cup, using the midpoint formula?

The price elasticity of demand can be found by:

When the absolute value of the percentage change in quantity demanded is less than the absolute value of the percentage change in price, demand is:

Local cable companies recently increased the price of basic services. A news expert reporting on the increase stated, "While prices have increased 40%, the cable company reports only a 20% increase in revenue." This remark suggests the demand for basic cable service is elastic.

A demand curve that is perfectly inelastic is:

Use the following to answer questions Figure: The Demand Curve -(Figure: The Demand Curve) Look at the figure The Demand Curve. By the midpoint method, the price elasticity of demand between $8 and $9 is approximately:

Use the following to answer questions Figure: The Demand for e-Books -(Figure: The Demand for e-Books) If the price of e-Books decreases from $6 to $4, total revenue _____, which means that demand is _____.

Given a price increase for any good, the price effect on revenue is always larger than the quantity effect on revenue.

The price elasticity of demand for gasoline in the short run has been estimated to be 0.1. If a war in the Middle East causes the price of oil (from which gasoline is made) to increase, how will that affect total expenditures on gasoline in the short run, all other things equal?

If the price elasticity of demand equals 0, the demand curve is:

Use the following to answer questions Figure: The Demand Curve -(Figure: The Demand Curve) Look at the figure The Demand Curve. By the midpoint method, the price elasticity of demand between $6 and $7 is approximately:

Use the following to answer questions Figure: The Demand for e-Books -(Figure: The Demand for e-Books) Look at the figure The Demand for e-Books. What is the price elasticity of demand (by the midpoint method) when the price decreases from $6 to $4?

Use the following to answer questions Figure: The Demand for e-Books -(Figure: The Demand for e-Books) Look at the figure The Demand for e-Books. The demand schedule _____ when the price increases from $4 to $6 _____ when it increases from $6 to $8.

A group of dairy farmers is trying to raise milk prices by 10%. If the price elasticity of demand for milk is 0.75 and the price elasticity of supply for milk is 0, by how much should farmers reduce their milk production to obtain the 10% increase?

Use the following to answer questions Figure: The Demand Curve -(Figure: The Demand Curve) Look at the figure The Demand Curve. By the midpoint method, the price elasticity of demand between $1 and $2 is approximately: