Exam 5: Elasticity and Its Application

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of demand for dog biscuits is

What is the price elasticity of demand at any point on a perfectly elastic demand curve?

Consider luxury weekend hotel packages in Las Vegas. When the price is $250, the quantity demanded is 2,000 packages per week. When the price is $280, the quantity demanded is 1,700 packages per week. Using the midpoint method, the price elasticity of demand is about

For which of the following goods is the price elasticity of demand most inelastic?

Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Last year, Jim bought 8 tickets to sporting events when his income was $30,000. This year, his income is $33,000, and he purchased 10 tickets to sporting events. Holding other factors constant and using the midpoint method, it follows that Jim's income elasticity of demand is about

If a t-shirt manufacturer supplies 1,000 t-shirts per week when the price of t-shirts is $10 and supplies 1,200 t-shirts per week when the price of t-shirts is $12, the price elasticity of supply is 2.

When a supply curve is relatively flat,

Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

For a horizontal demand curve,

Table 5-11 -Refer to Table 5-11. Which scenario describes the market for oil in the long run?

If the price elasticity of demand for a good is 1.2, then a 3 percent decrease in price results in a

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. Your roommate still enjoys Ramen noodles very much and buys even more, but you plan to buy fewer Ramen noodles in favor of foods you prefer more. When looking at income elasticity of demand for Ramen noodles, yours would

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

When studying how some event or policy affects a market, elasticity provides information on the

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?

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

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

A perfectly inelastic demand implies that buyers