LC6: Elasticity

The purpose of the midpoint method in calculating elasticity is to:

make the measure the same whether the price increases or decreases.

Previously owned clothing is an inferior good, so the income elasticity for secondhand clothing is:

negative

A vertical supply curve indicates a _____.

perfectly inelastic supply

If the price of the textbook required for an economics class increases from $100 to $120 and the bookstore still supplies the same number of books, supply is:

perfectly inelastic.

Which of the following pairs of goods are most likely to have a negative cross-price elasticity?

bicycles and bicycle helmets

If the cross-price elasticity between two goods is negative, the goods must be:

complements.

As one moves along a linear demand curve from high prices to low prices, the absolute value of price elasticity of demand:

decreases

European vacations are a luxury good for Paul. Paul's income elasticity for European vacations is:

greater than 1

The absolute value of the price elasticity of demand between $60 and $80 is:

1.0

Using two decimal places, the absolute value of price elasticity of demand between $100 and $150 is _____.

.33

Suppose that when the price of gasoline is $3 per gallon, 100 gallons are sold. Then the price increases to $4 per gallon and 90 gallons are sold. Using the midpoint method and two decimal places, the absolute value of the price elasticity of demand for gasoline between $3 and $4 is _____.

.37

If a 10% increase in the price of cranberries leads to an 18% increase in the quantity of cranberries supplied, the elasticity of supply for cranberries is (using one decimal place) _____.

1.8

If the price elasticity of demand for tennis rackets is 2, then a 10% increase in the price of tennis rackets will result in a:

20% decrease in the quantity demanded.

If the elasticity of supply of umbrellas is 0.75, the price of umbrellas would need to increase by _____% (using one decimal place) in order to increase the quantity of umbrellas supplied by 15%.

20.0

If the absolute value of the price elasticity of aspirin is 0.4 and the price increases by 60%, the quantity demanded decreases by _____%.

24

Suppose that when the price of a movie ticket is $4, 100 people attend the matinee. If the price is increased to $5, suppose that only 50 people attend the matinee. Using the midpoint method in numeral form, the absolute value of the price elasticity of demand is _____.

3

The absolute value of the price elasticity of demand between $400 and $350 is:

3

If the demand for computers increases by 15% when income increases by 5%, the income elasticity of demand, using one decimal place and the negative sign if necessary, is _____.

3.0

The toll to cross the Golden Gate Bridge increased by 20%, and rides on the ferry to cross San Francisco Bay increased by 60%. The cross-price elasticity between crossing the Golden Gate Bridge and riding the ferry is _____ and the bridge and the ferry are _____.

3; substitutes

If the elasticity of supply of popcorn is 1.20, the price of popcorn would need to increase by _____% (using one decimal place) in order to increase the quantity of popcorn supplied by 6%.

5.0

If the elasticity of supply of telescopes is 0.8, at a 7.5% increase in the price of telescopes would lead to a _____% (using one decimal place) increase in the quantity of telescopes supplied.

6.0

The price of aspirin recently decreased by 10%. If the price elasticity of supply of aspirin is 0.7, the quantity supplied will decrease by _____%.

7

If the elasticity of supply of chalk is 1.4, a 5% increase in the price of chalk would lead to a _____% (using one decimal place) increase in the quantity of chalk supplied.

7.0

If the price of golf clubs increases by 10% and the cross-price elasticity between golf clubs and golf balls is -3, then the demand for golf balls will _____ by _____%.

Decrease; 30

Which elasticity number indicates an inelastic supply?

The elasticity of supply of sunglasses is 0.85.

Along a linear demand curve, demand is:

relatively less elastic at lower prices than at higher prices.

The transportation department needs to increase its revenue, so it increases the toll on the toll road to the beach. Total revenue will increase if _____.

the price effect is larger than the quantity effect

The price elasticity of supply is the ratio of the percent change in the quantity supplied to the percent change in _____.

the price of the good

If the cross-price elasticity between two goods is zero, the goods must be:

unrelated