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Exam 4: Elasticity and Its Applications

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Question 31

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The demand for which of the following is likely to be the most price inelastic?

A) Transportation
B) Uber rides
C) Bus tickets
D) Airline tickets

E) A) and D)
F) A) and C)

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Question 32

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The price elasticity of demand measures the

A) magnitude of the response in quantity demanded to a change in price.
B) direction of the shift in the demand curve in response to a market event.
C) size of the shortage created by the increase in demand.
D) responsiveness of quantity demanded to a change in income.

E) B) and C)
F) A) and B)

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Question 33

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If the price elasticity of demand within the price range from R10 to R12.50 per kilogram for carrots is 0.79 and for radishes is 1.6, then within that price range

If the price elasticity of supply equals zero, this implies that

If an increase in the price of a good has no impact on the total revenue in that market, demand must be

A government seeking to raise revenue would be most likely to tax a good with a

If a demand curve is linear, the price elasticity of demand is constant along it.

Which of the following statements about the price elasticity of demand is correct?

Suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0.

Use the graph shown to answer the following questions. Put the correct letter(s) in the blank. a. The elastic section of the graph is represented by section from _______. b. The inelastic section of the graph is represented by section from _______. c. The unit elastic section of the graph is represented by section _______. d. The portion of the graph in which a decrease in price would cause total revenue to fall would be from _________. e. The portion of the graph in which a decrease in price would cause total revenue to rise would be from _________. f. The portion of the graph in which a decrease in price would not cause a change in total revenue would be _________. g. The section of the graph in which total revenue would be at a maximum would be _______. h. The section of the graph in which elasticity is greater than 1 is _______. i. The section of the graph in which elasticity is equal to 1 is ______. j. The section of the graph in which elasticity is less than 1 is _______.

If there is excess capacity in a production facility, it is likely that the firm's supply curve is

The cross-price elasticity of demand for substitute goods must be

The price elasticity of demand for a good measures the willingness of

If the cross-price elasticity between two goods is negative, the two goods are likely to be

If the cross-price elasticity of demand for two goods is negative, then the two goods are complements.

If the income elasticity of demand for a good is negative, it must be