Exam 4: Elasticity

When her income falls from $50,000 to $20,000, Alex increases her monthly purchase of hamburger from 20 pounds to 35 pounds. From the midpoint method, Alex's income elasticity of demand for hamburgers is:

When you change your quantity demanded of one good because of a change in price of another good, you are acting according to the principle of:

The income elasticity of demand for a good measures the responsiveness of to a change in .

When Nina decreases her price of lipstick from $7 to $5, she finds that her sales increase from 6 to 7. She faces demand for her product, and this price change will her total revenue.

How does the price elasticity of demand at relatively high prices compare to the price elasticity of demand at relatively low prices? Calculate the price elasticity from $5 to $6 and the price elasticity from $1 to $2 in the accompanying graph. Demand Curve for Sweatshirts

If the percentage change in quantity demanded of Good B is 2% and the percentage change in the price of Good A is -10%, what is the cross-price elasticity of demand?

When her income increases from $10,000 to $20,000, as shown in the accompanying table, Marguerite increases the quantity demanded from 3 to 7 rolls at a price of $3. From the midpoint method, income elasticity of demand for sushi is: Price (per roll) Quantity Demanded (income= \ 10,000/ year) Quantity Demanded (income= \ 1 5 9 \ 2 4 8 \ 3 3 7 \ 4 2 6 \ 5 1 5

The demand for ice cream sandwiches is:

When incomes fall by 20%, quantity demanded of specialty baked goods falls by 50%. Specialty baked goods are:

While there are many pizza places in Curtisville, Pappy's Pizza is known for its distinctive deep-dish pizza with an almost pie-like crust, whereas Momma's Pizza Pizzazz is comparable to many other restaurants. Pappy's is likely to find that it can prices to increase total revenue, and Momma's must prices to increase total revenue.

Refer to the accompanying graph. Price Quantity of Televisions ( =) Quantity of Televisions ( =) \ 350 250 375 \ 450 200 325 \5 50 150 275 \6 50 100 225 \ 750 50 175 a. Calculate the income elasticity of demand for televisions at a price of $550. b. Are televisions a luxury good, necessity good, or inferior good? Explain. c. Name a good for which consumption would likely fall when there is an increase in income from $20,000 to $30,000. Explain your reasoning.

Your local bakery gives you information on consumer purchasing habits for muffins and cupcakes. It tells you that, when the price of a muffin is $1, people buy 55 cupcakes. When the price of a muffin is raised to $2, cupcake purchases go up to 65 cupcakes. The cross-price elasticity of demand is:

Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

At higher prices, the price elasticity of demand is likely to be , whereas it is likely to be at lower prices.

Super Economy Brand products have an income elasticity of -1.4. Thus, these are goods.

The city of Barlow is known for its wide variety of ice cream shops. What will happen if Nick's Ice Cream Palace raises the price of its shakes?

If the percentage change in the quantity consumed of pizza is 8% and the percentage change in income is 2%, what is the income elasticity of demand for pizza?

Refer to the following graphs to answer the questions. Graph A Graph B Graph C Graph D Graph E -Which of these graphs represents perfectly price inelastic demand for a good?

Consider two labor markets. In the first, the elasticity of supply is relatively elastic, while it is relatively inelastic in the latter. Imposing a minimum wage in each market would result in unemployment in the first market and unemployment in the second.

When the price of a basketball is $15, the quantity supplied is 5,000. When the price increases to $20, the quantity supplied is 10,000. The price elasticity of supply is: