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Exam 5: Elasticity and Its Application

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Question 151

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

A) yoga mats
B) prescription medicine
C) protein powder
D) gym memberships

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

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Question 152

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Suppose good X has a positive income elasticity of demand. This implies that good X could be (i) A normal good.(ii) A necessity. (iii) An inferior good.(iv) A luxury.

A) (i) only
B) (i) and (ii) only
C) (i) , (ii) , and (iv) only
D) (iii) only

E) All of the above
F) B) and C)

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Question 153

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Table 5-12 -Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $6 and $8?

Figure 5-12 -Refer to Figure 5-12. Sellers' total revenue would increase if the price

The supply of oil is likely to be

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each. At a price of $0.80, the bakery would be willing to supply 1,100 bagels. Using the midpoint method, the price elasticity of supply for bagels is about

If demand is perfectly inelastic, the demand curve is vertical, and the price elasticity of demand equals 0.

A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues. The city manager suggests that the city lower the price of admission to raise revenues. Who is correct?

Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $16 and $40?

While in college, John and Bethany each buy five packages of mac-n-cheese per week. After they graduate and have full-time jobs, John buys six packages per week, but Bethany buys only two packages per week. When looking at income elasticity of demand for mac-n-cheese, John's

The demand for soap is more elastic than the demand for Dove soap.

Scenario 5-1 Suppose that when the average college student's income is $10,000 per year, the annual quantity demanded of Patty's Pizza is 50 and the annual quantity demanded of Sue's Subs is 80. Suppose that when the price of Patty's Pizza increases from $8 to $10 per pie, the quantity demanded of Sue's Subs increases from 80 to 100. Suppose also that when the average student's income increases to $12,000 per year, the annual quantity demanded of Patty's Pizza increases from 50 to 60. -Refer to Scenario 5-1. Using the midpoint method, the cross price elasticity of demand is

When the price of chai tea lattés is $5, Maxine buys 20 per month. When the price is $4, she buys 30 per month. Maxine's demand for chai tea lattés is

Demand is elastic if the price elasticity of demand is

Table 5-4 The following table shows the demand schedule for a particular good. -Refer to Table 5-4. Using the midpoint method, what is the price elasticity of demand when price rises from $12 to $16?

For a vertical demand curve,

Figure 5-21 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?

The price elasticity of demand measures

A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues. The city manager suggests that the city lower the price of admission to raise revenues. Who is correct?

An advantage of using the midpoint method to calculate the price elasticity of demand is that it uses the metric system.