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Exam 4: Elasticity: The Responsiveness of Demand and Supply

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Question 21

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Economists estimated that the cross-price elasticity of demand for beer and wine is −0.83 and the income elasticity of wine is 5.03.This means that________.

A) beer and wine are substitutes and wine is an inferior good
B) beer and wine are complements and wine is a luxury good
C) beer and wine are substitutes and wine is a luxury good
D) beer and wine are complements and wine is an inferior good

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Question 22

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When there are few substitutes available for a good,demand tends to be relatively inelastic.

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Question 23

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If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be ________.

Explain the relationship between price elasticity of demand and total revenue. __________________________________________________________________________________________________________________________________________________________________________________________

Figure 4.8 -Refer to Figure 4.8.What is the value of the price elasticity of supply between g and h?

If the demand for a product is elastic,the quantity demanded changes by a smaller percentage than the percentage change in price.

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

If the demand for mobile phone service is inelastic,then________.

The current price of canvas messenger bags is $36 each,and sales of the bags equal 400 per week.If the price elasticity of demand is −2.5 and the price changes to $44,how many messenger bags will be sold per week? Use the midpoint formula. __________________________________________________________________________________________________________________________________________________________________________________________

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that________.

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

Assume that the demand curve for sunblock is linear and downward sloping.Which of the following statements about the slope of the demand curve for sunblock and the price elasticity of demand for sunblock is true?

Suppose at a price of $50,Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and at a price of $40,it sells 25 tickets.Based on this information,the demand for Yoshi's jazz performance is elastic.

If,for a given percentage increase in price,quantity supplied increases by a proportionately larger percentage,then supply is ________.

If you expect the economy is going to boom and average income in the economy will rise in the foreseeable future,the type of firm that would be able to increase its sales if your expectations are met is _________.

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots,then________.

Figure 4.7 -Refer to Figure 4.7.The supply curve on which price elasticity changes at every point is shown in ________.

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit-elastic? __________________________________________________________________________________________________________________________________________________________________________________________

If at a price of $10,a vendor sells 5 units of a product and at a price of $8,6 units are sold,then,using the midpoint formula,the demand for this good is inelastic.

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?