Exam 4: Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

The cross-price elasticity of demand between two goods measures the percentage change in the demand for one good for a given percentage change in the price of another good.

Other things being equal,the demand for a product is less elastic if

Which of the following is a characteristic of an item with elastic demand?

For a given shift in demand,the less elastic is supply,the

Carla buys one soft drink a day,regardless of the price.Which of the following statements is correct with respect to Carla?

One reason the demand for electricity is probably more price elastic than the demand for table salt is that

Assume that a firm makes available 50 more units of a good at a price of $2 than it made available when the price was $1.What is the price elasticity of supply?

Indicate whether the percentage change in quantity demanded or percentage change in price is greater and whether demand is considered sensitive or insensitive for each of the following categories: elastic,inelastic,unit elastic.

Explain,in words,the difference between a low price elasticity of demand and a high price elasticity of demand for a 15 percent increase in price.

Exhibit 4-2 -Refer to Exhibit 4-2.If the supply curve shifts to the right,then which of the following is true?

If supply decreases and total revenue in an industry increases,

Define,in words,income elasticity of demand and tell why we care if it is positive or negative.

The government can issue ration coupons to deal with problems resulting from a price floor.

A price ceiling would result in a(n)

Suppose that the price of product G increases from $10 to $20 and,in response,quantity demanded declines from 100 to 80.Using the midpoint formula,what is the elasticity of demand?

Does a price ceiling result in a shortage or a surplus? Why?

The demand for gasoline should be

If a household increases its consumption of a good by 10 percent when its income increases by 5 percent,then the good is

A perfectly inelastic demand curve has a price elasticity

Total revenue will decrease if price