Exam 6: Elasticity

In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic?

The supply of antiques is highly inelastic. Thus, increases in demand would have a small effect on price.

Suppose the income elasticity of demand for toys is +2.0. This means that

Which of the following generalizations is not correct?

Most goods can be classified as normal goods rather than inferior goods. The definition of a normal good suggests that

Movie theaters charge lower prices to see a movie in the afternoon than in the evening because there is an

Refer to the graph above. If demand decreases, then total revenues will

Suppose the price of local cable TV service increased from$15.00 to$20.00 and as a result the number of cable subscribers decreased from 248,000 to 200,000. Along this portion of the demand curve, using the midpoint method, price elasticity of demand is approximately

If a 10 percent increase in the price of one good results in no change in the quantity demanded of another good, then it can be concluded that the two goods are

You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1. In order to increase total revenues from that product, you should

The price-elasticity of demand is always negative because of

A 3 percent increase in the price of tea causes 6 percent increase in the demand for coffee. The cross elasticity of demand for coffee with respect to the price of tea is

For a linear demand curve,

Along a linear downward-sloping demand curve, the price elasticity of demand will be

In the price range where demand is elastic, if the seller of the good raises its price, then total revenues will increase.

A 10 percent increase in the price of tea causes 8 percent increase in the demand for coffee. The cross elasticity of demand for coffee with respect to the price of tea is

A firm can sell as much as it wants at a constant price. Demand is thus

An increase in the price of tickets to a popular sporting event will increase total revenue if

Refer to the diagram. Total revenue at price P₁ is indicated by area(s)

A price increase from $43 to $49 results in an increase in quantity supplied from 220 units to 240 units. The price elasticity of supply in this price range is