FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 5: Elasticity and Its Applications

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

The supply curve for oil is ________ because ________.

A) elastic; per unit costs do not increase when the quantity supplied increases
B) elastic; oil exploration and drilling is not expensive relative to revenues earned
C) inelastic; per-unit costs rise quickly when the quantity supplied increases
D) inelastic; oil exploration and drilling is not expensive relative to revenues earned

E) None of the above
F) All of the above

Correct Answer

verified

Show Answer

Question 62

Multiple Choice

Review LaterAdd Note

Review Later

If the price of ice cream changes by 30 percent and the quantity demanded changes by 75 percent, what is the absolute value of demand elasticity?

A) 2.5, so demand is inelastic
B) 0.4, so demand is inelastic
C) 0.4, so demand is elastic
D) 2.5, so demand is elastic

E) B) and D)
F) A) and C)

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

If the demand for a good is estimated to be _____, then firms producing the good will experience an increase in total revenue if prices fall.

Figure: Elasticity of Swim Trunks The demand for swim trunks appears in the figure. What is the elasticity of demand for swim trunks? Suppose that your swimwear business is currently overstocked with swim trunks. If you want to sell 18 percent more swim trunks, how much should you cut your price?

The supply of ancient Egyptian papyrus manuscripts is probably:

If two linear demand curves run through a common point, then at any given quantity the curve that is flatter is more elastic.

Assume a product has an inelastic demand. If the producer of the good raises the price of the product, that producer's total revenue will decrease.

For each of the following goods would you expect the demand to be elastic or inelastic? Provide explanation for each of your rationales. a. oil b. Coca-Cola c. bread

The price elasticity of demand is:

The demand for Pepsi is more elastic than the demand for soda.

The more quantity demanded responds to a change in the price of that good the _____ is for that good.

Which of the following would NOT make elasticity of demand for a good more elastic?

On June 14, 2011, the Delaware Senate approved a gun buyback program. The yearlong program would authorize the state to pay $100 for every gun turned over to police. What sort of guns should Delaware officials expect to get if this plan becomes law?

Assume a product has a rather elastic demand. If the producer of the good raises the price of the product, that producer's total revenue will decrease.

A good with an absolute value of the price elasticity of demand of 1.0 is classified as:

The demand for oil would become less elastic if the price of oil increases by a significant amount for a long period of time.

The demand for fruit is more elastic than the demand for apples.

Total revenue is:

A new per unit tax on yacht production decreases the supply of yachts. If yachts are elastically demanded, what will happen to total revenues from yacht production?

Figure: iPod Consumers A local electronics store sells iPods for $100 per unit. The manager who took a lesson from his economics course in college decides to offer a 20 percent discount to students who can present their current student ID at purchase. Given the demand curves for regular and student customers, answer the following questions. a. What will be the total revenue for both groups of customers if the store offers the discount? b. For which group of customers is the demand more elastic? c. What is the elasticity of demand between the prices of $100 and $80 in the regular market? d. What is the elasticity of demand between the prices of $100 and $80 in the student market? e. If the manager increases the regular price of iPods to $120 and lowers the discount price to $70, how much could the store increase total revenues?