Exam 4: Elasticity: The Responsiveness of Demand and Supply

Consider the following pairs of items: a.shampoo and conditioner b.iPhones and earbuds c.a laptop computer and a desktop computer d.beef and pork e.air-travel and weed killer Which of the pairs listed will have a negative cross-price elasticity?

If, for a given percentage decrease in price, quantity supplied decreases by a proportionately smaller percentage, then supply is:

Suppose the supply of bicycles is price elastic.This means that________.

Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09.This means that________.

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50, the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03.These elasticities mean that________.

If demand is inelastic, what is the absolute value of the price elasticity of demand?

Suppose that the price of a money clip increases from $0.75 to $0.90 and quantity supplied rises from 8000 units to 10000 units.Use the midpoint formula to calculate the price elasticity of supply.

What could a firm do if it wanted to know whether the demand for its product was elastic, unit-elastic, or inelastic?

In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________.

In recent years, the prices of new domestically produced cars have been falling.Suppose consumers respond by reducing their demand for used cars and mass transport services such as bus travel.This information suggests that the cross-price elasticity between new cars and used cars, and the cross-price elasticity between new cars and bus travel are negative.

Price elasticity of supply is used to gauge________.

A demand curve which is ________ represents perfectly inelastic demand, and a demand curve which is ________ represents inelastic demand.

What does a demand curve that is horizontal indicate about a commodity?

Figure 4.1 -Refer to Figure 4.1.What is the demand curve on which elasticity changes at every point given?

If the cross-price elasticity of demand for computers and software is negative, this means the two goods are:

Linesha, a university student working part-time, receives a wage increase.An avid movie buff, she increased her purchases of Blu-ray discs and reduced her purchases of DVDs.Based on this information,

There is a limited number of original Picasso paintings.This means that the supply of original Picasso paintings is perfectly inelastic.

Most food products have low income and price elasticities of demand.

If a firm is in an antitrust court case being accused of monopolising a product, what would the firm hire an economist to show?

What factors would make you more sensitive or less sensitive to price when purchasing petrol? __________________________________________________________________________________________________________________________________________________________________________________________