Exam 5: Elasticity and Its Application

In January the price of dark chocolate candy bars was $2.00, and Willy's Chocolate Factory produced 80 pounds. In February the price of dark chocolate candy bars was $2.50, and Willy's produced 110 pounds. In March the price of dark chocolate candy bars was $3.00, and Willy's produced 140 pounds. The price elasticity of supply of Willy's dark chocolate candy bars was about

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.

Some firms eventually experience problems with their capacity to produce output as their output levels increase. For these firms,

A key determinant of the price elasticity of supply is the

When demand is perfectly inelastic, the price elasticity of demand

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

The difference between slope and elasticity is that slope

At price of $1.25, a paper manufacturer is willing to supply 150 spiral notebooks per day. At a price of $1.50, the paper manufacturer is willing to supply 175 spiral notebooks per day. Using the midpoint method, the price elasticity of supply is about

While in college, John and Bethany each buy five packages of mac-n-cheese per week. After they graduate and have full-time jobs, John buys six packages per week, but Bethany buys only two packages per week. When looking at income elasticity of demand for mac­n­cheese, John's

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

Figure 5-3 -Refer to Figure 5-3. Which demand curve is perfectly inelastic?

If the price elasticity of supply is 1.2, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Scenario 5-4 The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%. -Refer to Scenario 5-4. Total consumer spending on aged cheddar cheese will

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

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

If the cross-price elasticity of demand for two goods is -4.5, then

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

If the cross-price elasticity of demand between two goods is negative, what is the relationship between the two goods?

When the price of a good is $5, the quantity demanded is 120 units per month; when the price is $7, the quantity demanded is 100 units per month. Using the midpoint method, the price elasticity of demand is about

In the case of perfectly inelastic demand,