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Exam 4: Elasticity

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Question 1

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The supply curve for Max's Munchies is shown in the accompanying figure. a. What is the price elasticity of supply between $9 and $10? b. Is this price elasticity relatively elastic or inelastic? Explain. c. What happens to this supply curve if Max has difficulty finding workers to make his product?

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a. At $9, quantity supplied is 15 bags.A...

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Question 2

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Over time, the price elasticity of supply for sunglasses will become more:

A) inelastic.
B) unitary elastic.
C) unchanged.
D) elastic.
E) perfectly elastic.

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Question 3

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Used car dealers find that their sales rise in a recession. We can be certain that consumers view used cars as:

Nita is a devoted Coca-Cola consumer, whereas Becky can drink either Coca-Cola or Pepsi products. Nita's demand for Coca-Cola will be relatively more , while Becky's demand will be relatively more .

To keep the percentage change in quantity demanded equally proportional to the percentage change in price when the prices rise by 5%, a consumer would need to quantity demanded by .

If the cross-price elasticity of demand between Good A and Good B is 3, the price of Good B increases, and the price elasticity of demand for Good B is inelastic, we can expect to see a change in the quantity demanded for Good A:

Graph the following situations: a. My cats love Kitty Kat Treats, and I will buy as much as the store has at the current price of $2. But when the price of Kitty Kat Treats increases by even 5 cents, I won't buy any! b. I will buy 20 bags of Kitty Kat Treats at any price. c. If the price of Kitty Kat Treats rises by 5%, I'll decrease my quantity demanded by 10%.

Refer to the following graphs to answer the questions. Graph A Graph B Graph C Graph D Graph E -Which of these graphs represents relatively price elastic demand for a good?

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

The demand for Mina's earrings can be represented by the equation:Qd = -2P + 10 a. If the price = $4.50, what is quantity demanded? If the price decreases to $4.00, what is the quantity demanded? What is the price elasticity of demand between these two points along the demand curve? b. Repeat the calculations in parts (a) and (b) for price = $1.00 and $0.50. Determine the quantity demanded at each price and the price elasticity of demand at this point on the graph.

Cellphone companies found that when they raised the price of connecting to wireless hot spots, demand decreased more than proportionally among casual users but decreased less than proportionally among businesspeople. This is because wireless connectivity is a(n) for casual users but a(n) for businesspeople.

If the owner of Sally's Salty Treats finds that, in the long run, she can trade one type of input for another, the price elasticity of supply is:

If you know that the price elasticity of demand is: a. -5, graph the demand curve. b. -½, graph the demand curve. c. infinite, graph the demand curve.

The government estimates that the demand curve for DVDs is represented by the equation Q _d = -5P + 20 a. Using prices of $2 and $3, determine the price elasticity of demand.

The reason that Darren buys a lot more paintings when the price of art falls is that:

The introduction of new gaming systems that can compete effectively with the Nintendo console will make the demand for the Nintendo console become:

If the income elasticity of demand for noodles is -2 and the percentage change in the quantity consumed is 5%, what is the percentage change in income?

At a price of $5/hour, Bob wants to hire three workers. When the price rises to $7/hour, Bob wants to hire only two workers. Bob's price elasticity of demand for workers is:

Income elasticity of demand for professional haircuts is found to be 1.7. This service is a:

Assume that a family spends 35% of its income on housing, 20% on travel-related expenses, 10% on utilities, 25% on health care, and 5% on miscellaneous items. Demand for which category will be most responsive to a change in price?