Exam 6: Elasticity: the Responsiveness of Demand and Supply

When there are few close substitutes available for a good, demand tends to be

Suppose the current price of copper is $3 per pound and the quantity supplied is 200 pounds per day. If the price of copper falls to $2.50 per pound, the quantity supplied drops to 180 pounds per day. Use the midpoint formula to calculate the price elasticity of supply for copper.

Figure 6-5 -Refer to Figure 6-5. The section of the demand curve labeled "A" represents

Assume that the price elasticity of demand for gasoline is -0.06. If the government tax causes the price of gasoline to increase by 50 percent, what will be the decrease in the quantity of gasoline demanded?

The cross-price elasticity of demand measures the

Economists use the concept of ________ to measure how one economic variable, such as quantity, responds to a change in another economic variable, such as price.

Opera Estate Girls' School is considering increasing its tuition to raise revenue. If the school believes that raising tuition will increase revenue,

Suppose the demand curve for hybrid cars shifts to the right. This will cause a relatively small increase in the price of hybrid cars if

According to a study of the price elasticities of products sold in supermarkets, the price elasticity of demand for toothpaste is estimated at -0.45. Which of the following could explain why the price elasticity of demand for toothpaste is so low?

Figure 6-4 -If, for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is

If the market for a product is broadly defined, then

Rank these three items in terms of the elasticity of the demand for them at any given price, from most elastic to least elastic: hot beverages, coffee and Peets' Coffee.

Figure 6-4 -If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would

The price elasticity of demand is equal to

Barbara, the consummate hostess, proudly announced as she served dessert, "A port is often the perfect end to a meal, sipped with a piece of my scrumptious chocolate cake." Evidently, Barbara views

For consumers who opt to pay a $10 monthly fee to have unlimited texting on their cell phones, but choose not to pay a $5 monthly fee to have unlimited call minutes, the unlimited texting option has a ________ than the unlimited minutes option.

Which of the following items is likely to have the highest income elasticity of demand?

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value). This means that a 20 percent increase in the price of beef, holding everything else constant, will cause the quantity of beef demanded to

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.

In September 2012, the average price of gasoline in the United States was $3.91 per gallon and consumers bought 5 percent less gasoline than they had during September 2011, when the average price was $3.66 per gallon. Based on these numbers, what was the price elasticity of demand for gasoline from September 2011 to September 2012?