Exam 6: Elasticity: the Responsiveness of Demand and Supply

Facing stiff competition,Hendrix College,a small liberal arts institution in Conway,Ark. ,decided two years ago to bolster its academic offerings,promising students at least three hands-on experiences outside the classroom,including research,internships and service projects.Although it raised tuition and fees by 29 percent,enrollment in the freshman class rose by 37 percent. Source: Jonathan D.Glater and Alan Finder,"In New Twist on Tuition Game,Popularity Rises With the Price," New York Times,December 12,2006 Based on the information above,the demand for Hendrix College education is

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic.She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor.If I wanted to buy a mystery novel I would have many authors to choose from.Therefore,the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct?

Suppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a good.Calculate the income elasticity of demand for the good and determine what type of good it is.

Consider the following pairs of items: a.shampoo and conditioner B.iPhones and earbuds C.a laptop computer and a desktop computer D.beef and pork E.air-travel and weed killer Which of the pairs listed will have a negative cross-price elasticity?

At a price of $20,Daphne sells 35 hand-painted dog collars per week.When she raised her price to $25,she sold 28 per week.Based on this information,the demand for her dog collars is

If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded,then the demand for golf balls is

When the price of tortilla chips rose by 10 percent,the quantity of tortilla chips sold fell 4 percent,and the sale of dips (like salsa and bean dip)fell 8 percent.This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ________,so the two are ________.

Suppose that at a price of $55,100 units were sold while at a price of $33,153 units were sold.Without calculating the price elasticity value,can you determine whether demand is elastic,unit elastic,or inelastic? Explain your answer.

Figure 6-4 -Refer to Figure 6-4.The absolute value of the price elasticity of demand at the midpoint of the demand curve is

A perfectly elastic demand curve is

Suppose the California Nurses Union successfully secured a 12 percent increase in the wages of registered nurses.If a hospital responds by reducing the quantity of registered nurses hired and increasing the quantity of physician's assistants hired,what conclusion can you draw?

The midpoint formula is used to measure the elasticity of demand between two points on a demand curve

Consider the following pairs of items: A.shampoo and conditioner B.iPhones and earbuds C.a laptop computer and a desktop computer D.beef and pork E.air-travel and weed killer Which of the pairs listed will have a positive cross-price elasticity?

Assume that you own a small boutique hotel.In an attempt to raise revenue,you reduce your rates by 20 percent.However,your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

The cross-price elasticity of demand between Coca-Cola and Pepsi-Cola is calculated by dividing

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

If the price elasticity of demand is unit elastic,a 10 percent increase in price will result in a 10 percent increase in revenue.

Figure 6-11 -Refer to Figure 6-11.What is the value of the price elasticity of supply between g and h?

If a 5 percent increase in income leads to a 10 percent increase in quantity demanded for airline travel,then airline travel is