Exam 5: Elasticity and Its Application

Table 5-2 -Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is

If demand is price inelastic, then when price rises, total revenue

Under which of the following conditions would the interdiction of illegal drugs result in a decrease in the quantity of drugs sold and in a decrease in total spending on illegal drugs by drug users?

Which of the following is not a determinant of the price elasticity of demand for a good?

Suppose the price elasticity of demand for a product is 1.3. If a supplier wants to increase revenue, what change should it make to price, if any?

Which of the following is likely to have the most price inelastic demand?

Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase revenue?

A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues. The city manager suggests that the city lower the price of admission to raise revenues. Who is correct?

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each. At a price of $0.80, the bakery would be willing to supply 1,100 bagels. Using the midpoint method, the price elasticity of supply for bagels is about

Table 5-7 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-7. Using the midpoint method, at a price of $16, what is the income elasticity of demand when income rises from $5,000 to $10,000?

In the market for oil in the short run, demand

Figure 5-13 -Refer to Figure 5-13. Between point A and point B on the graph, demand is

The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the

If the income elasticity of demand for a good is 0.56, is the good a normal or inferior good?

A "Just Say No" drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.

The cross-price elasticity of demand for bacon and eggs likely would be negative because bacon and eggs are complements for many people.

With regard to elasticity, as a firm nears its production capacity, supply becomes more

The supply of a good will be more elastic, the

When quantity demanded responds strongly to changes in price, demand is said to be

Whether a good is a luxury or necessity depends on the