Exam 5: Elasticity and Its Application

Scenario 5-4 The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%. -Refer to Scenario 5-4. The equilibrium price will

Good news for farming can be bad news for farmers because the

Table 5-5 -Refer to Table 5-5. When price is between $5 and $9, demand is

Which of the following was not a reason OPEC failed to keep the price of oil high?

Figure 5-8 -Refer to Figure 5-8. An increase in price from $15 to $20 would

For a particular good, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

The price elasticity of demand for bread

Figure 5-4 -Refer to Figure 5-4. The section of the demand curve from B to C represents the

The difference between slope and elasticity is that slope

Suppose demand is perfectly inelastic, and the supply of the good in question decreases. As a result,

Figure 5-14 -Refer to Figure 5-14. Over which range is the supply curve in this figure the least elastic?

Figure 5-18 -Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $4 and $5?

Suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0.

If the price elasticity of demand for a good is 2, then a 10 percent decrease in the quantity demanded must be the result of

Suppose that when the price of good X increases from $800 to $850, the quantity demanded of good Y increases from 65 to 70. Using the midpoint method, the cross price elasticity of demand is about

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $8 and $16. Then, when the price changes between $9 and $10,

If marijuana were legalized, it is likely that there would be an increase in the supply of marijuana. Advocates of marijuana legalization argue that this would significantly reduce the amount of revenue going to the criminal organizations that currently supply marijuana. These advocates believe that the

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $6 and $12. Then, when the price increases from $8 to $10,

If a supply curve is perfectly horizontal, what is the value of the price elasticity of supply?

The price elasticity of demand measures how much