Exam 5: Elasticity and Its Application

If the quantity supplied responds only slightly to changes in price, then

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,

A manufacturer produces 1,000 units, regardless of the market price. For this firm, the price elasticity of supply is

Total revenue will be at its largest value on a linear demand curve at the

Suppose a freeze in Florida significantly reduces the supply of oranges this year. As a result, would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

Figure 5-1 -Refer to Figure 5-1. Between point A and point B, the slope is equal to

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

The measure of how willing consumers are to buy less of a good as its price rises is called

Figure 5-3 -Refer to Figure 5-3. Which demand curve is unit elastic?

A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t- shirt maker would be willing to supply 100 t-shirts. Using the midpoint method, the price elasticity of supply for t- shirts is about

Suppose goods A and B are substitutes for each other. We would expect the cross-price elasticity between these two goods to be

Suppose you manage a baseball stadium. To pay the salary for a star player, you would like to increase the total revenue from ticket sales. Should you increase or decrease the price of a ticket to increase revenue? Explain.

Between 1950 and today there was a

Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic.

Table 5-1 -Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

If the price elasticity of supply for a good is equal to infinity, then the

Figure 5-4 -Refer to Figure 5-4. Assume, for the good in question, two specific points on the demand curve are Q = 2,000, P= $15) and Q = 2,400, P = $12). Then which of the following scenarios is possible?

For which of the following goods is the income elasticity of demand likely lowest?

Table 5-3 Consider the following demand schedule. -Refer to Table 5-3. Using the midpoint method, what is the price elasticity of demand between $0 and $3?