Exam 6: Describing Supply and Demand: Elasticities

As the manager of a ski resort, you want to increase the number of lift tickets sold by 8 percent. Your staff economist has determined that the price elasticity of demand for lift tickets is 2. To increase sales by the desired amount, you should decrease the price of a lift ticket by:

If the supply of a product is inelastic, this implies that a specific percentage change in price leads to:

As the price of tomatoes fell from $2.50 to $2.00, the quantity imported from Mexico fell from 1,800 tons to 900 tons. The elasticity of supply of tomatoes imported from Mexico is:

College students tend to eat more ramen noodles than do recent college graduates. A primary reason for this is that:

Suppose the demand for butter increases from 800 to 1,000 pounds when income falls from $40,000 to 30,000. Income elasticity is:

An elasticity of supply of 2.7 means that:

It is estimated that a 5 percent decline in income will reduce health care purchases by 2.5 percent and reduce dental service purchases by 8 percent. From this information, one can conclude that:

Measuring the price of gasoline in dollars per quart, an economist calculates the price elasticity of demand to be 1. What would the price elasticity of demand be if the economist had chosen to measure the price in dollars per gallon?

If the price elasticity of supply is 0.5, a 10 percent increase in price will cause a:

George Davis and Michael Wohlgenant estimate that for every 1 percent increase in the price of Christmas trees, quantity demanded falls by 0.6 percent. The demand for Christmas trees is:

Price elasticity of demand is the percentage change in price divided by the percentage change in quantity demanded.

If the supply curve intersects the vertical (price) axis, the supply curve has an elasticity:

If the percentage increase in the quantity supplied equals the percentage increase in the price, the supply:

Cross-price elasticity of demand is defined as the:

Refer to the following graph. Elasticity is greatest at point:

Refer to the following table to answer the question. Demand is most elastic between: Price Quantity Demanded \ 2.00 26 \ 4.00 22 \ 6.00 18 \ 8.00 14 \ 10.00 10

If frost in Florida reduces the quantity of vegetables sold by 20 percent and increases their retail price by 30 percent, one can conclude that:

Refer to the graph shown. Which of the following curves demonstrates a perfectly inelastic demand curve?

For necessities, income elasticity is any value:

The supply of Russian caviar from the Caspian Sea diminished after the collapse of Soviet communism. The price of caviar rose from $395 a pound to $595 a pound. Still, revenue from the sale of caviar rose 30 percent. You can conclude that: