Exam 5: Elasticity and Its Application

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

Suppose demand is given by the equation: At what price will total revenue be maximized?

Cross-price elasticity of demand measures how

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

Refer to Table 5-12. Between which two quantities listed is demand most elastic?

In the long run, the quantity supplied of most goods

When demand is elastic, an increase in price will cause

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

The supply of a good will be more elastic, the

For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is

The cross-price elasticity of garlic salt and onion salt is -2, which indicates that garlic salt and onion salt are substitutes.

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about

When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is

The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.

Suppose that 50 hot dogs are demanded at a particular price. If the price of hot dogs rises from that price by 5 percent, the number of hot dogs demanded falls to 48. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

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

Figure 5-3 -Refer to Figure 5-3. The demand curve representing the demand for a luxury good with several close substitutes is

For a vertical demand curve,

Figure 5-17 -Refer to Figure 5-17. Using the midpoint method, what is the price elasticity of supply between point B and point C?