Exam 3: Demand and Supply Applications

If two demand curves intersect, the flatter demand curve will be more inelastic and the steeper demand curve will be more elastic.

Empirical research indicates that the demand for most agricultural products is

Price elasticity of demand is a measure of the

If the University of Wisconsin increases its tuition and its tuition revenue decreases, the demand curve for attending the University of Wisconsin must be

Most likely, a tax on a luxury good such as yachts will result in

If government sets a ceiling on rent that is below the market equilibrium rent, the result will be

If the price elasticity of demand for taxi services is estimated to be 1.0, then the demand for taxi services is inelastic.

If an airline increases the price of a ticket to New York and its total revenue decreases, the demand curve for airline tickets to New York must be

If the U.S. Postal Service increases the price of first-class mail to generate additional revenues, it estimates that the demand for mail is relatively elastic.

When the price of corn increases, the increase in quantity supplied will be greater in the long run than the short run.

If a 10 percent increase in new car prices results in a 20 percent decrease in the quantity of new cars purchased by consumers, then the

Most people spend a small part of their income on birthday candles. This would suggest the demand for birthday candles is elastic.

The demand for a product is more elastic if the product has many close substitutes in consumption.

Suppose there is another terrorist anthrax scare. The U.S. Post Office finds that it now has extra costs associated with de-contaminating all first class mail for anthrax. It is considering a rate hike, but it will only be successful in raising more revenue to pay for these additional costs if

The demand for a product is relatively elastic if

If the percentage change in quantity demanded is less than the percentage change in price, demand in that price range is

If the price elasticity of demand for movie tickets is 3.0, then a new $1 tax on movie tickets would probably cause the price of a movie ticket to go up by less than $1.

If there is a rightward shift in the wheat supply curve, total revenue will increase only if wheat demand is inelastic.

Suppose the government imposes a ceiling on rent charged for residential apartments. If the ceiling is below the market equilibrium rent, some people would likely have a difficult time finding residential apartments to rent.

The Pittsburgh Pirates found out in 2002 that the demand for home game seats was elastic.