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Exam 6: Describing Supply and Demand: Elasticities

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Question 81

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Compared to the elasticity of demand for off-peak trains, one would expect elasticity of demand for peak-time trains to be:

A) greater.
B) less.
C) unrelated.
D) the same.

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Question 82

Multiple Choice

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It has been estimated that the price elasticity for cigarettes is 0.164. Assuming there are currently no taxes on cigarettes, to reduce cigarette purchases by 5 percent, the government would need to tax cigarettes enough to:

A) raise the price by 0.82 percent.
B) lower the price by 0.82 percent.
C) raise the price by 30.5 percent.
D) lower the price by 30.5 percent.

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Question 83

Multiple Choice

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Which of the following statements is true about a downward-sloping demand curve that is a straight line?

A newspaper recently lowered its price from 50 cents to 30 cents, causing the number of newspapers sold to increase from 240,000 to 280,000. Other things equal, the data imply that the elasticity of demand for this newspaper is about:

If the percentage increase in the quantity supplied is smaller than the percentage increase in the price, the supply:

If consumers won't pay more than $1.50 for a pack of gum and at $1.50 they will buy an almost infinite amount, price elasticity of demand at $1.50 is:

The president of a college has been told that when they raised their tuition by 15 percent the previous year, total revenue from tuition remained unchanged. Assuming the change in revenue is due to the change in tuition only, the president could conclude that demand for that college, over that tuition range, must be:

College students tend to eat more ramen noodles than do recent college graduates. A primary reason for this is that:

If demand is highly inelastic and supply shifts to the right, price:

Susan's price elasticity of restaurant meals is 2.27. If the price of a restaurant meal falls by 2 percent, the quantity of restaurant meals Susan demands will:

If the quantity of picture frames supplied increases 15 percent when the price goes up 20 percent, the elasticity of supply is:

Suppose the demand for butter increases from 800 to 1,000 pounds when income falls from $40,000 to 30,000. Income elasticity is:

Charlie will purchase 10 percent more cans of Coke if the price of a can of Coke falls by 5 percent. Charlie's price elasticity of demand for cans of Coke is:

If quantity demanded falls by 25 percent when price rises by 50 percent, demand is said to be:

Compute the approximate elasticity of demand from the following data: $\begin{array} { | l | c | c | } \hline & \text { Price } & \text { Quantity } \\\hline \text { Initial situation } & \$ 23 & 11.5 \\\hline \text { New situation } & 20 & 13.5 \\\hline\end{array}$

The price elasticity of demand for insulin by diabetic patients is much smaller than the price elasticity of demand for leather shoes. This is an example of how the price elasticity of demand:

Refer to the graph shown. Which point has an elasticity greater than 1?

An elasticity of supply of 2.7 means that:

Refer to the following graph. Elasticity is greatest at point:

Online music streaming services, such as Spotify, have decimated the market for CDs. Based on this information, you can conclude that streaming services: