Exam 6: Elasticity: The Responsiveness of Demand and Supply

Suppose the supply curve for digital cameras shifts to the right.This will cause a relatively large decrease in the price of digital cameras if both demand and supply are inelastic.

If demand is inelastic,the absolute value of the price elasticity coefficient is greater than one.

Which of the following statements is true?

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

At a price of $100,Beachside Canoe Rentals rented 11 canoes.When it increased its rental price to $125,9 canoes were rented.Calculate the absolute value of the price elasticity of demand for canoe rentals,using the midpoint formula.

Along a downward sloping,linear demand curve,total revenue is the greatest

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

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

Explain the concepts of cross-price elasticity of demand and income elasticity of demand.What do positive and negative values indicate for each of these demand elasticities ?

Refer to the Article Summary.How would sports teams know if they were operating on the elastic portion of the demand curve for tickets?

Suppose that at a price of $55,100 units were sold while at a price of $33,153 units were sold.Without calculating the price elasticity value,can you determine whether demand is elastic,unit-elastic,or inelastic? Explain your answer.

Total revenue is equal to

Suppose when Nablom's Bakery raised the price of its breads by 10 percent,the quantity demanded fell by 15 percent.What was the effect on sales revenue?

If the market for a product is narrowly defined,then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

The Mass Rapid Transit (MRT)System in Hong Kong has been running significant losses.Transport Ministry officials have argued over whether to raise fares to combat the losses.One argument against a fare increase is that it will aggravate traffic congestion on the streets during peak commuter hours.Suppose that the current fare is $4 and the government is considering raising it to $6.Officials estimate that this reduces the number of rides purchased from 10,000 to 8,000 per day. a.What is the estimated elasticity of demand for MRT rides? b.What does this elasticity of demand suggest to you about what will happen to total revenue earned by the transit system? c.Last year,the MRT system incurred a loss of $50,000 per day.Do you think the fare increase will resolve the deficit problem as well as Ministry officials anticipate? Explain.

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

A demand curve that is horizontal indicates that the commodity

If demand is perfectly elastic,the absolute value of the price elasticity coefficient is

Figure 6-10 -Refer to Figure 6-10.The supply curve on which price elasticity changes at every point is shown in