Exam 6: Elasticities

For a given decrease in demand, the effect on price is smallest and the effect on quantity exchanged largest when:

Which of the following pairs of goods would most likely exhibit a cross price elasticity of 2.2?

Fantastic Cuts Hair Salon knows that a 15% increase in the price of their haircuts will result in a 5% decrease in the number of haircuts sold. What is the elasticity of demand facing Fantastic Cuts?

When two goods have negative cross elasticities of demand and negative income elasticities, they are:

The price elasticity of demand coefficient for gourmet coffee is estimated to be equal to 1.6. It is expected, therefore, that a 10% increase in price would lead to:

If the short run elasticity of demand for widgets is 0.4 and the long run elasticity of demand for widgets is 0.95, a decrease in price will ____ total revenue in the short run and ____ total revenue in the long run.

​Exhibit 6-3 ​ -Refer to Exhibit 6-3. The graph that best illustrates a perfectly inelastic demand curve is:

If the short run elasticity of demand for widgets is 1.1 and the long run elasticity of demand for widgets is 3.6, a decrease in price will ____ total revenue in the short run and ____ total revenue in the long run.

The measure used to determine whether two products are substitutes or complements is called the:

If the short run elasticity of demand for a good was greater than 1, an increase in the price of the good would tend to:

When two goods have positive cross elasticities of demand and negative income elasticities, they are:

Which of the following is false?

Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

A jeweler cut prices in his store by 20% and the dollar value of his sales fell by 20%. This is indicative of:

Demand tends to be more elastic, the greater the number of good substitutes, the greater the fraction of one's income devoted to a product and the greater the time allowed to respond to a price change.

Shaina and Mariah have a business that provides personal fitness training services. They know that after raising their prices from $50 to $75 per hour, the quantity of hours they spent delivering training services fell from 90 to 80 hours per week. The demand for their services is:

A 10% decrease in the price of energy bars leads to a 20% increase in the quantity of energy bars demanded. It appears that:

Price elasticity of supply is a measure of the relative responsiveness of the change in price to a change in quantity supplied.

If the government wanted a tax to not burden consumers much, it would want to tax an industry with:

If the demand is perfectly elastic, what would happen to the quantity demanded if there is a tiny increase in price?