Exam 6: Describing Supply and Demand: Elasticities

What is the income elasticity of demand? How can it be used to determine whether a good is a normal good or an inferior good? What is the cross-price elasticity of demand? How can it be used to determine whether two goods are substitutes or complements?

A sporting goods store observes that as they reduce the price of squash balls from $5 to $4, their quantity demanded rises from 200 to 220. Rounding to the nearest tenth, they correctly compute the elasticity of demand of squash balls to be:

It has been estimated that the price elasticity of demand for attending baseball games is 0.23. Other things held constant, a 10 percent increase in attendance can be explained by a:

Refer to the graph shown. When price rises from $30 to $40:

For necessities, income elasticity is any value:

Refer to the following graph. Since the supply curve intersects the horizontal axis, all the points along the supply curve shown are inelastic.

An economist estimates that with every 15 percent increase in income, the quantity of turkey purchased declines by 1.8 percent. From this information one would conclude that turkey is:

Refer to the graph shown. The elasticity of demand is closest to 1 on line segment:

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

Supply is said to be inelastic when the:

Under which of the following two scenarios would demand be more elastic? Explain. (a)Demand for a camera. (b)Demand for a 35 mm SLR camera with auto rewind,advance,zoom,and flash.

Refer to the graph shown. Between points E and F demand is:

Refer to the graph shown. Which supply curve is perfectly elastic?

Consider the following supply curve: (a)Calculate the elasticity of supply between points A and B. (b)Calculate the elasticity of supply between points B and C.

Under which of the following two scenarios would demand for hot dogs be more elastic? Explain. (a)You are at a baseball game at Wrigley Field and want to eat a hot dog. (b)It's Tuesday,you are planning the menu for a picnic you are going to have on Saturday and you decide to serve hot dogs.

Elizabeth Savoca estimated that for every 1 percent increase in tuition costs at a college, 2.4 percent fewer students applied to that college. This indicates that the elasticity of applying to college is: