Exam 6: Elasticities

A decrease in demand will:

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

Price elasticity of demand is a measure of the relative responsiveness of the change in quantity demanded to a change in price.

Which of the following is false?

An increase in price will cause a firm's total revenue to increase if demand is price elastic.

A tax is imposed on orange juice. Consumers will bear more of the burden of the tax:

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

As the time to respond to a change in market conditions increases, the odds of demand being elastic:

The formula for calculating the cross price elasticity of demand is:

When demand is elastic:

​Exhibit 6-4 -Refer to Exhibit 6-4. With reference to Graph B, at a price of $5, total revenue equals:

If the demand curve is perfectly elastic, the elasticity coefficient is ____ and the curve is ____.

If demand for lima beans is inelastic, a poor lima bean harvest could increase the total revenue of lima bean producers.

A 25% decrease in the price of breakfast cereal leads to a 20% increase in the quantity of cereal demanded. As a result:

If the supply curve for aspirin is perfectly elastic, a reduction in demand will cause the equilibrium price to:

Which of the following is associated with a more elastic demand curve?

For a given increase in price, the greater is the elasticity of supply, the greater is the resulting

Given an upward sloping supply curve, the more inelastic is demand, the greater the fraction of the burden of taxation that is borne by consumers.

Assume the price of widgets increases by 22 percent and the quantity supplied increases by 27 percent as a result. The elasticity of supply coefficient is:

You have been hired by the city to determine whether or not an increase in the price of tickets for the mass transit system would raise system revenues. The debate has been heated and the city council seems to be divided. One side argues that in order to increase revenues from the transit system, prices must be increased. The opposing side argues that a price increase at this time will lower revenues. What assumptions are each side making about the price elasticity of demand, and how might you determine the best course of action?