Exam 5: Elasticity and Its Application

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

A key determinant of the price elasticity of supply is the

When demand is inelastic, the price elasticity of demand is

In general, elasticity is a measure of

Suppose demand is given by the equation: Using the midpoint method, what is the price elasticity of demand between $1 and $2?

OPEC failed to maintain a high price of oil in the long run, partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Figure 5-7 -Refer to Figure 5-7. For prices above $5, demand is price

When demand is inelastic, a decrease in price will cause

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for minivans causes the price of minivans to increase by 5%, then the quantity supplied of minivans will increase by about

The value of the price elasticity of demand for a good will be relatively large when

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then

If the price elasticity of supply is zero, then

The price elasticity of demand measures the

Josh mows lawns. If the demand for lawn-mowing service is elastic and Josh wants to increase his total revenue, he should

If the quantity supplied is exactly the same regardless of the price, supply is

Hilda's Hair Hysteria earned $3,750 in total revenue last month when it sold 125 haircuts. This month it earned $3,600 in total revenue when it sold 90 haircuts. The price elasticity of demand for Hilda's Hair Hysteria is

Figure 5-12 -Refer to Figure 5-12. Which of the following price changes would result in no change in sellers' total revenue?

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.

Refer to Figure 5-5. The maximum value of total revenue corresponds to a price of