Price Elasticity of Demand

To help balance their budget, a college increases tuition. This action will increase revenues if the price elasticity of demand for college education is

Inelastic

Which of the following will tend to make the demand for a product more elastic?

(A)New firms which produce similar products enter the industry.

A city transit authority increases the price of subway and bus tickets from S1.25 to S1.50. If the demand for these tickets is price inelastic, the number of people riding buses and subways and the city's revenues will most likely change in which of the following ways?

(B)Number of People Riding = Decrease ; City's Revenues = Increase

A firm operating in monopolistic competition produces two different goods, A and B. The demand for A is price elastic and the demand for B is price inelastic. To decrease its total revenue, the firm should change the price of A and B in which of the following ways?

(B)Price of A = Raise it ; Price of B = Lower it

Assume that demand for soda is price elastic. Which would happen if the supply of soda goes up?

(B)Price will fall and total revenue will go up.

If poor growing conditions destroy a large part of the almond crop and almond farmers' revenues go up, which of the following is true over this range of prices?

(B)The demand for almonds is price inelastic.

Which of the following must be true if the revenues of taco makers go up when the price of tacos go up?

(B)The demand for tacos is price inelastic.

Assume that there is perfectly inelastic demand for a product and that there is an upward sloping supply curve. If the cost of producing this product goes up, what will happen in the market for this product?

(B)The supply goes down and the equilibrium price goes up.

If the demand for insulin is price inelastic, a 5 percent increase in the price of insulin will

(B)increase the total revenue of insulin producers

If a 10 percent increase in the price of a good leads to a 25 percent decrease in the quantity demanded of the good, demand is

(B)relatively elastic

In which of the following cases would a firm's total revenue increase?

(C)Price decreases and demand is elastic.

The price of an airline ticket usually goes up the closer to the departure date one buys. Why do airline companies utilize this pricing strategy?

(D)As the departure date approaches, demand becomes less elastic

Moving from left to right along a downward-sloping linear demand curve, price elasticity varies in which of the following ways?

(D)First elastic, then unit elastic, and finally inelastic

In the elastic range of the demand curve for a firm, which of the following is true?

(E)If the firm decreases its price, total revenue will go up.

A band knows that if they charged $16 a ticket, 80 fans would buy tickets for a show, and if they charged $8 a ticket, 160 fans would buy tickets. The demand for concert tickets over this range of prices is

(E)unit elastic

In this graph, at which of the given points is demand most elastic?

C) Z

The price of good A goes down from $100 to $90 per unit and that the quantity demanded of good A goes up from 250 to 300 units. In this price range, the demand for good A is

Elastic