Elasticity

Elastic supply occurs if the change in quantity supplied is _________ to a change in price the same relatively responsive relatively unresponsive

relatively responsive

In a market with relatively inelastic demand, if the supply curve shift due to a fall in production costs, the equilibrium price will _________ by ________ than equilibrium quantity. Decrease; more Increase; less Decrease; less

Decrease; more

A perfectly elastic supply curve is vertical. horizontal. upward sloping to the right.

Horizontal

Which of these questions is the best example of elasticity? What is the least amount of goods a supplier can produce without upsetting the customers? How will a change in consumer behavior affect the overall consumer experience? How much will a change in price or quantity impact consumer and producer behavior?

How much will a change in price or quantity impact consumer and producer behavior?

If the elasticity of demand for a company's product is estimated to be 1.72, what would you advise the company to do if their objective is to increase revenue? Lower the price Keep the price the same Raise the price

Lower the price

Using the midpoint method, calculate the price elasticity of demand of Good Z using the following information: When the price of good Z is $10 (P1), the quantity demanded of good Z is 85 units (Q1). When the price of good Z is $15 (P2), the quantity of demanded of good Z is 60 units (Q2). The price elasticity of demand for good Z = 0.86 The price elasticity of demand for good Z = 0.52 The price elasticity of demand for good Z = 1.90

The price elasticity of demand for good Z = 0.86

You are the manager of the public transit system. You are informed that the system faces a deficit, but you cannot cut service, which means you cannot cut costs. Your only hope is to increase revenue by increasing fares. You are advised that the estimated price elasticity of demand for the first few months after a price change is about −0.3. Select the statement that best describes the results of raising the fare in the short run. Total revenue rises immediately after the fare increase, since demand over the immediate period is price inelastic. Total revenue will rise incrementally as the demand fluctuates and price moves back and forth between being elastic and inelastic. Total revenue falls, since demand changes and becomes price inelastic.

Total revenue rises immediately after the fare increase, since demand over the immediate period is price inelastic.

A 10% decrease in the price of potato chips leads to a 30% increase in the quantity of soda demanded. It appears that price elasticity of demand for soda is 3. price elasticity of demand for potato chips is 3. cross-price elasticity of demand for soda is -3.

cross-price elasticity of demand for soda is -3.

Suppose the price of apples increase by 20%, resulting in consumers to purchase 15% more pears. Given this information, it appears that cross-price elasticity of pears is 0.75 price elasticity of demand of pears is 0.75 price elasticity of demand of apples is 1.33

cross-price elasticity of pears is 0.75

Given that total revenue = price x quantity, what will happen to total revenue if price increases when demand is elastic? Increase stay the same decrease

decrease

Teenage workers are assumed to have _____ labor supply; therefore a 5% increase in wage would result in _______ percentage change in quantity of labor supplied. inelastic, greater elastic, less elastic, greater

elastic, greater

When income increases and the demand for a good increases, the good is considered a inferior good. complementary good. normal good.

normal good.

Negative cross-price elasticity of demand between two goods indicates that the two goods are complements substitutes inferior goods

complements

If consumers find cola and iced tea good substitutes, then it is likely that the goods' cross price elasticities are greater than zero. the goods' price elasticities of demand are less than one. the goods' income elasticities are less than zero.

the goods' cross price elasticities are greater than zero.

Elasticity allows economists to measure the responsiveness of one variable to changes in another variable. how firms can maximize profits. the frequency of shift in demand.

the responsiveness of one variable to changes in another variable.

Elasticity measures the behavior response of economic agents in a given situation. Which question is likely to be answered using elasticity? Does on-demand Internet streaming media cause more people to stay home? If a restaurant puts their pizza on sale, will the additional number of pizza sold offset the discount on each item? Will their sales revenues for pizza go up or down? If a business raises its prices, are they utilizing new technology?

If a restaurant puts their pizza on sale, will the additional number of pizza sold offset the discount on each item? Will their sales revenues for pizza go up or down?

Elasticity measures the behavioral response of economic agents in a given situation. Which question is likely to be answered using elasticity? Does on-demand Internet streaming media cause more people to stay home? If a business raises its prices, are they utilizing new technology? If a restaurant puts their pizza on sale, will the additional number of pizzas sold offset the discount on each item? Will their sales revenues for pizza go up or down?

If a restaurant puts their pizza on sale, will the additional number of pizzas sold offset the discount on each item? Will their sales revenues for pizza go up or down?

Given that total revenue = price x quantity, what will happen to total revenue if price increases when demand is elastic? It will increase. It will stay the same It will decrease

It will decrease

An addicted smoker likely has which type of demand? elastic constant inelastic

inelastic

A person who takes life-saving prescription drugs most likely has a(n) ______ demand for drug. Therefore an increase in the price of price of the drug will result in _______ total revenue for the drug company. elastic; increased Inelastic; decreased inelastic; decreased

inelastic; decreased

Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company's product at the current price is 1.4, what would you advise the company to do? lower the price raise the price keep the price the same

lower the price

Determining the price elasticity of demand involves all of the following factors, but NOT luxuries versus necessities. slope of the supply curve. availability of substitutes.

slope of the supply curve.

When a 10% increase in income causes a 4% increase in quantity demanded of a good the income elasticity is 2.5 and the good is a normal good. the income elasticity is .4 and the good is a normal good. the price elasticity of demand is .4 and the good is an inferior good.

the income elasticity is .4 and the good is a normal good.

You are the manager of a restaurant and would like to increase revenue. The servers suggest decreasing the price of drinks and food. The servers' recommendation is based on the assumption that Demand for drinks and food in inelastic Demand for drinks and food is perfectly inelastic Demand for drinks and food is elastic

Demand for drinks and food is elastic

Teenage workers are assumed to have ________ labor supply, therefore a 5% increase in wage would result in ________ percentage change in quantity of labor supplied. elastic, greater inelastic, greater elastic, less

elastic, greater

The size of the change in the quantity demanded of a good or service due to change in its price is measured by the elasticity of demand. When the percentage change in the quantity demanded for a good or service is ______ and price elasticity is ______. inelastic; less than 1 elastic; greater than 1 unitary; equal to 1

elastic; greater than 1

If the supply curve for a product is horizontal, then the elasticity of supply is equal to 1. equal to infinity. equal to zero.

equal to infinity.