Elasticity

The quantity of peanuts supplied increased from 40 tons/week to 60 tons/week when the price of peanuts increased from $4/ton to $5/ton. The price elasticity of supply for peanuts over this price range is:

• Elastic
• Inelastic
• Unit Elastic
• Perfectly Inelastic

A city's transit authority increases the price of subway and bus tickets from $1.25 to $1.50. If the demand for these tickets is price inelastic, 1) the # of people riding buses & subways AND 2) the city's revenues will change in which way (respectively)?

• 1) Increase; 2)Increase
• 1) Decrease; 2) Increase
• 1) Decrease; 2) Decrease
• 1) No Change; 2) Increase

The market for goldfish is competitive. From year 1 to year 2, both the price and the quantity of goldfish increase. This is most likely caused by:

• An increase in the supply
• A decrease in the demand
• An increase in the demand
• A decrease in both the demand & the supply

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

• Relatively inelastic
• Relatively elastic
• Perfectly elastic
• Perfectly inelastic

For an inferior good, an increase in consumer income will cause:

• The demand curve to shift left
• The demand curve to shift right
• The supply curve to shift left
• The supply curve to shift right

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

• Price increases and demand is elastic
• Price decreases and supply is inelastic
• Price decreases and demand is inelastic
• Price decreases and demand is elastic

Based on the demand curve for good X, it can be determined that good x has:

• Many substitutes
• A few substitutes
• No substitutes
• Only one substitute

A product is likely to have a price elasticity of demand that exceeds 1 when:

• Its price falls

• It is a necessity

• It has close substitutes

• Consumers are not very responsive to changes in price

 If the price elasticity of demand for a product equals 1, as its price rises the:

• Quantity demanded does not change.
•  Total revenue increases.
•  Total revenue does not change
•  Quantity demanded increases.

A 10 percent decrease in the price of a Pepsi decreases the demand for a Coca-Cola by 50 percent. The cross elasticity of demand between a Pepsi and Coca-Cola is:

• 50
• 0.20
• 10
• 5