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Exam 6: Elasticity

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Question 61

Multiple Choice

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Suppose that when the price of a good falls from $12 to $9, the quantity demanded of that good rises from 310 units to 350 units.  What is the approximate price elasticity of demand between these two prices?

A) 0.42
B) 2.36
C) 0.68
D) 3.80
E) 1.12

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Question 62

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Exhibit 19-3 Refer to Exhibit 19-3. When price decreases from $1.50 to $0.50, the price elasticity of supply is

A) 0.
B) 1.0.
C) 5.0.
D) 0.1.
E) 0.5.

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Question 63

Multiple Choice

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Demand for a given good is elastic, which means that the percentage change in __________ is greater than the percentage change in __________.

Exhibit 19-7 ​ Refer to Exhibit 19-7. As a producer, if you had a choice, which of the depicted markets would you operate in?

When a good is perfectly inelastic in demand, or perfectly elastic in supply, the buyers will pay the full tax that is placed on the sellers.

Exhibit 19-7 ​ Refer to Exhibit 19-7. If the government is contemplating imposing a per-unit tax and it wants the tax to have as small a negative effect on consumers as possible, it should choose a good for which the market is depicted on graph

If the percentage change in quantity demanded is equal to the percentage change in price for good Z,  then demand for good Z is

Exhibit 19-7 ​ Refer to Exhibit 19-7. Which of the graphs shows a perfectly elastic demand curve?

If the supply curve for good X is vertical, then the demand for good X must be perfectly inelastic.

Exhibit 19-9 ​ Refer to Exhibit 19-9.  What is the price elasticity of supply between $2 and $4?

What does price elasticity of supply measure?  Explain the relationship that exists between price elasticity of supply and the length of time sellers have to adjust to the price change.

If the demand for cocaine is inelastic and people commit crimes to buy drugs, then a drug bust can increase the amount of drug-related crime.

If the price of good X falls and the demand for good X is unit elastic, then the percentage rise in quantity demanded is __________ the percentage fall in price, and total revenue __________.

Cross elasticity of demand measures consumer responsiveness to a change in the price of one good, in terms of the quantity demanded of some other good.

If a small increase in the price of a good reduces quantity demanded to zero, demand is ________________ and the price elasticity of demand is equal to _______________.

Exhibit 19-3 Refer to Exhibit 19-3. When price decreases from $3.50 to $2.50, the price elasticity of supply is

Exhibit 19-2 ​ Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S₁ to S₂. What is the per-unit tax equal to?

Exhibit 19-6 ​ Refer to Exhibit 19-6. Let S₁ be the supply curve of a producer. If S₂ is the supply curve of the same producer after the government imposes a per-unit tax, the tax revenue generated will be

If demand for a given good is perfectly elastic, it follows that

Exhibit 19-8 ​ Refer to Exhibit 19-8. The market for good X is initially at point A. A tax is then placed on the production of good X. As a result, the equilibrium price changes to __________, and sellers now receive __________ per unit they sell and they get to keep __________ for each unit they sell.