Exam 4: Elasticity

From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be than that of hockey players because . Price of Ice Skates Quantity Demanded (hockeyplayers) Quantity Demanded (recreational skaters) \ 10 95 70 \ 20 85 50 \ 40 75 35 \ 50 65 45 \ 60 60 50

If the income elasticity of demand is 0.5, the good will be a(n):

The local bakery calculates the price elasticity of demand for its cinnamon rolls to be -1.25. This tells them that demand is and price is to the buyer.

If the income elasticity of demand for good smartphone apps is 5 and the percentage change in income is 10%, what is the percentage change in the quantity consumed?

Assume that the demand for Choco Candy Bites is price elastic. a. Use the relatively price elastic demand curve from (a) and draw the entire market graph for Choco Candy Bites. Label the equilibrium price P₁ and the equilibrium quantity Q ₁. If the supply curve for Choco Bites shifts to the left, will there be a relatively large or small change in P and Q? Indicate this on your graph. Label the new equilibrium price P₂ and the equilibrium quantity Q ₂. b. Compare this change in P and Q to the changes that would result with a relatively price inelastic demand curve. c. What impact does the price elasticity of demand have on the change in P and Q?

Demand is almost always more price elastic in the long run because:

A producer knows that the price elasticity for his product is -0.5. He wants to increase quantity demanded by 30%. By what percentage does he need to change the price?

If the income elasticity of demand is 1.2, the good will be a(n):

The owners raised the price because they believed that the demand for ice cream sandwiches is:

The percentage change in price is 5%, while the price elasticity of supply is 0. The percentage change in quantity supplied:

A firm knows that Mike's income elasticity of demand for hair ties is 5 while for Sally it is 0.2. A firm can reason that a hair tie is a(n) good for Mike while it is a(n) good for Sally.

What good is most likely to have an income elasticity of demand equal to 0.3?

Robert's Furniture produces high-quality wooden bedroom sets that take approximately 4 months to make, from start to finish. The price elasticity of supply for these bedroom sets in the short term is:

Winged Wonders is a specialty store that sells butterfly ornaments. The owner wants to increase her total revenue and knows that the price elasticity of demand for her product is -0.4. What should she do to her price?

What good is most likely to have a negative income elasticity of demand?

The supply curve for Fancy Flowers is represented by the equation Q _s = 5 + 10P. a. Using prices of $5 and $2, determine whether the price elasticity of supply is elastic or inelastic.

In a recession, there are many unemployed workers. Employers find that, when the price of labor is $9.00, the quantity supplied is 200 workers. When they lower the wage to $8.50, 175 workers are willing to work. a. Calculate the price elasticity of supply for workers. b. Over time, technology becomes more effective as a substitute for workers. What happens to the firm's demand for workers? Explain.

Shawna wins the lottery and her income increases by 60%. She used to buy 10 pints of cottage cheese per month and now she buys 12 pints. Her income elasticity of demand for cottage cheese is , making it a(n) good.

A local merchant raises the price of his good and finds that his total revenues increase. The demand for this good is:

Explain the impact that time has on the price elasticity of demand for Barney's Baked Goods.