Exam 5: Elasticities of Demand and Supply

Anna owns the Sweet Alps Chocolate store.She charges $10 per pound for her hand made chocolate.You,the economist,have calculated the elasticity of demand for chocolate in her town to be 2.5.If she wants to increase her total revenue,what advice will you give her?

If the demand for insulin is inelastic,an increase in insulin prices leads to

Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month.Using the midpoint formula,the ________ percent change in price lead to a ________ percent change in the quantity demanded.

Moving downward along a linear (straight-line)downward-sloping demand curve,the

When hamburger is $3 per pound,Ms.Rush buys 6 pounds.When hamburger is $2 per pound,Ms.Rush buys 10 pounds.Describe Ms.Rush's demand between these two prices.

Suppose the demand for peaches sold from one roadside stand in Georgia is perfectly elastic.As a result,a 7 percent increase in the price charged by the owner of this stand leads to

If the price of a DVD falls from $20 to $12 and the quantity of DVDs supplied decreases from 118,000 per hour to 100,000 per hour,using the midpoint formula the elasticity of supply equals

The price elasticity of demand is a measure of

If the cross elasticity of demand between two goods is negative,are the goods substitutes or complements?

If a 20 percent increase in the price of a good does not change the quantity supplied,the

Of the following,which good has the most elastic demand?

The income elasticity of demand is

Patrick lives near two gas stations,Exxon and Shell.If Exxon decreases the price of gas,we predict that the quantity of gasoline demanded at Shell will

Using the midpoint method,if the price of an airline ticket from Orlando to Pittsburgh falls from $275 to $238,the percentage change in price is

If a 10 percent price increase generates a 10 percent decrease in quantity demanded,then demand is

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

All of the following statements are true EXCEPT

The price of beef increased by 20 percent and the quantity supplied increased by 10 percent.The supply of beef is

Suppose the price of a tie rises from $45 to $55.Using the midpoint method,what is the percentage change in price?

If the cross elasticity of demand between Coke and Pepsi is 2.02,then Coke and Pepsi are