Exam 4: Elasticity

The price elasticity of demand for adults for cigarettes is 0.4. If government wants to reduce smoking among adults by 15 percent, by what percentage should it raise the price of cigarettes? Teenagers have a higher price elasticity of demand for cigarettes than do adults. Suppose the price elasticity of teenagers' demand for cigarettes is 0.8. If the government imposes a tax on cigarettes that raises the price to reduce overall smoking by 15 percent, by what percentage will the government reduce teenage smoking?

If the income elasticity of demand for spaghetti is -1.3, then spaghetti

-Consider the straight-line demand curve illustrated in the figure above. At a price of $6, demand is

Which of the following goods has a perfectly inelastic supply?

Refining gasoline for our cars requires a very specialized resource, crude oil. As a result, the

"The fewer the number of substitutes for a good, the more elastic the demand for that good." Is the previous statement true or false?

The elasticity of supply measures the sensitivity of

When the price of a movie ticket increases from $5 to $7, the quantity of tickets demanded decreases from 600 to 400 a day. What is the price elasticity of demand for movie tickets?

If a college wanted to increase its revenues from tuition payments, should it increase the tuition of day and evening students alike?

-The demand curve in the figure above illustrates the demand for a product with

If demand is inelastic, an increase in the price will

If a price hike of 5 percent increases the quantity demanded of another good by 2 percent, the goods must be ________ and the cross elasticity of demand equals ________.

The price elasticity of demand equals the slope of the demand curve.

-The above figure illustrates the demand curve for a good. The good has

When we calculate the price elasticity of demand, we use percentages of the average price and the average quantity in order to get the same value for the elasticity regardless of whether the price falls or rises.

A decrease in the price of eggs from $1.50 to $1.30 per dozen resulted in an increase in egg purchases in two cities. In Philadelphia, daily egg purchases increased from 6000 to 8000 dozens; in nearby Dover, Delaware, daily egg purchases increased from 300 to 400 dozens. The price elasticity of demand is therefore

On December 10 the price of a Christmas tree is $50 and 100 trees are purchased. On December 20 the demand for Christmas trees decreases so that the price falls to $30 and 20 trees are purchased. From this set of facts, the

Grape juice prices increased by 20 percent in 2007. Suppose in response grape growers did not increase or decrease their grape production. The elasticity of supply is best described as

If a 5 percent increase in the price results in a 9 percent increase in quantity supplied, the elasticity of supply is

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700. What does the price elasticity of supply equal?