Micro Chp. 5

. If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about

0.63, and supply is inelastic.

When the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about

0.67.

If a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is

1.33

At a price of $1.00, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.20, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about

2.20

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a

50 percent decrease in the quantity demanded.

The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the

demand for wheat is elastic.

When the price of an eBook is $15.00, the quantity demanded is 400 eBooks per day. When the price falls to $10.00, the quantity demanded increases to 700. Given this information and using the midpoint method, we know that the demand for eBooks is

elastic.

. If the price elasticity of supply for wheat is less than 1, then the supply of wheat is

inelastic.

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

inelastic.

. If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches

infinity, and the supply curve is horizontal.

The difference between slope and elasticity is that slope

is a ratio of two changes, and elasticity is a ratio of two percentage changes.

Which of the following is likely to have the most price elastic demand?

lattés

If the quantity supplied is the same regardless of price, then supply is

perfectly inelastic.

When consumers face rising gasoline prices, they typically

reduce their quantity demanded more in the long run than in the short run.

The smaller the price elasticity of demand, the

steeper the demand curve will be through a given point.

If the price of walnuts rises, many people would switch from consuming walnuts to consuming pecans. But if the price of salt rises, people would have difficulty purchasing something to use in its place. These examples illustrate the importance of

the availability of close substitutes in determining the price elasticity of demand