Exam 5: Elasticities of Demand and Supply

When does a decrease in supply raise the price more: When demand is elastic or when demand is inelastic? When OPEC decreases the supply of oil,the price of gasoline skyrockets.Hence is the demand for gasoline elastic or inelastic?

If a good has many close substitutes,then its demand is most likely

A product's price elasticity of demand is likely to be greater

In a study session,your friend says,"Demand is elastic if the percentage change in the price exceeds the percentage change in quantity demanded." Is your friend correct?

The price of furnace filters increased by 5 percent and the quantity demanded did not change.The price elasticity of demand for furnace filters is

We calculate the price elasticity of demand as the

-Using the table above,what is the elasticity of demand between the prices of $6 and $4?

If the price elasticity of demand for razors is 0.32,the demand for razors is

When the price of bananas rises 2 percent,the quantity demanded of peanut butter falls 4 percent. a.What is the cross elasticity of demand between these two goods? b.How are these goods related? c.If the price of bananas rises,how will that affect the demand curve for peanut butter?

Suppose a good can be produced using commonly available resources.The elasticity of supply is

What effect does a price hike have on the total revenue of the producers?

Suppose a local photographer increases his prices by 8 percent and quantity demanded decreases by the same percentage.This set of facts indicates that the demand for his services is

"The price elasticity of demand is a measure of how sensitive demanders are to changes in the price of a product." Is this statement true or false?

If substitutes for a good are readily available,the demand for that good

-Based on the data in the table above,ice cream and cake are ________ goods.

People take fewer trips by airplane when their incomes fall because of a recession.Trips by airplane must be

Total revenue increases if the price of the good

Tacos and pizza are substitutes.If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza,the cross elasticity of demand equals

-In the figure above,when the price falls from $8 to $7,total revenue

When the price of a cup of coffee falls from $3.00 to $2.50,the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method,the price elasticity of demand is