Chapter 6. Elasticity: The Responsiveness of Demand and Supply


 Stephanie Harmon
 1 years ago
 Views:
Transcription
1 Chapter 6. Elasticity: The Responsiveness of Demand and Supply Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON Principles of Microeconomics
2 Elasticity Demand curve: the relationship between the price of a good and the quantity demanded. Beyond the law of demand, we want to know how much the quantity demanded change as a result of a price increase or decrease. Economists use the concept of elasticity to measure it. Elasticity: A measure of how much one economic variable responds to changes in another economic variable.
3 Price Elasticity of Demand Price elasticity of demand: The responsiveness of the quantity demanded to a change in price Price elasticity of demand = % change in quantity demanded % change in price (1) price elasticity of demand is not the same as the slope of the demand curve. the measurement of slope is sensitive to the units chosen for quantity and price. price elasticity of demand is always negative. but we drop  sign and compare their absolute values.
4 Elastic/Inelastic Demand Elastic Price elasticity > 1 Inelastic Price elasticity < 1
5 Elastic/Inelastic Demand Unitelastic Price elasticity = 1 Perfectly elastic Price elasticity =
6 Elastic/Inelastic Demand Perfectly inelastic Price elasticity = 0
7 Midpoint Formula It is possible to have different values for the price elasticity of demand between the same two points on the same demand curve. To ensure that we have only one value of the price elasticity of demand, we use the midpoint formula. Elasticity by Midpoint Formula (Q 2 Q 1 ) (P2 P 1 ) ( Q 1 +Q 2 2 ) ( P 1 +P 2 ) 2
8 Determinants of Price Elasticity of Demand Why do price elasticities differ among products? (1)Availability of Close Substitutes In general, if a product has more substitutes available, it will have more elastic demand. If a product has fewer substitutes available, it will have less elastic demand. (2)Luxuries versus Necessities The demand curve for a luxury is more elastic than the demand curve for a necessity.
9 Determinants of Price Elasticity of Demand Why do price elasticities differ among products? (3)Passage of Time It usually takes consumers some time to adjust their buying habits when prices change. The more time that passes, the more elastic the demand for a product becomes. (4)Definition of the Market The more narrowly we define a market, the more elastic demand will be. (5)Share of a Good in a Consumer s Budget the demand for a good will be more elastic the larger the share of the good in the average consumer s budget.
10 Elasticity and Total Revenue Total revenue: price per unit number of units sold. When demand is elastic (inelastic), a cut in price will increase (decrease) total revenue.
11 Demand, Total Revenue, Marginal Revenue Q1. Draw demand curve, total revenue curve, and marginal revenue curve. Q2. Describe the relationship between price elasticity of demand and total revenue. Q3. Describe the relationship between marginal revenue and total revenue.
12 CrossPrice Elasticity of Demand Crossprice elasticity of demand (CPE) measures the effect of an increase in the price of one good on the quantity of another good demanded. The CPE can is positive or negative, depending on whether the two products are substitutes or complements. Cross price elasticity of demand = % change in quantity demanded of one good % change in price of another good (2)
13 Income Elasticity of Demand Income elasticity of demand (IE) measures the responsiveness of quantity demanded to changes in income. Income elasticity of demand = % change in quantity demanded % change in income (3) Income elasticity > 0 : Normal good. 1 < IE : luxury good. 0 < IE < 1 : necessity good. Income elasticity < 0 : Inferior good.
14 Application: Elasticity and the Disappearing Family Farm We can use price elasticity and income elasticity to analyze economic issues. over the past 60 years, supply curve for wheat has moved to the right largely. income elasticity of demand for wheat was low, so demand for wheat increased relatively little. price elasticity of demand is also low, so demand curve is steep relatively. The large shift in the supply curve and the small shift in the demand curve resulted in a sharp decline in the price of wheat.
15 Price Elasticity of Supply Price Elasticity of Supply: The responsiveness of the quantity supplied to a change in price. Price elasticity of supply = % change in quantity supplied % change in price (4) the price elasticity of supply will be a positive number. elastic (>1), inelastic (<1), unitelastic(=1). perfectly elastic (= ), perfectly inelastic (= 0)
16 Application: Changes in Price Depend on the Price Elasticity of Supply Demand Typical and Demand July4 represent the typical demand for parking spaces and demand on the Fourth of July. in figure (a), supply is inelastic, shifting from A to B results in a large increase in price and a small increase in the quantity supplied. in figure (b), supply is elastic, shifting from A B results in a smaller increase in price and a larger increase in the quantity supplied.
Elasticity: The Responsiveness of Demand and Supply
Chapter 6 Elasticity: The Responsiveness of Demand and Supply Chapter Outline 61 LEARNING OBJECTIVE 61 The Price Elasticity of Demand and Its Measurement Learning Objective 1 Define the price elasticity
More informationELASTICITY AND ITS APPLICATION
5 ELASTICITY AND ITS APPLICATION CHAPTER OUTLINE: I. The Elasticity of Demand A. Definition of elasticity: a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants.
More information2007 Thomson SouthWestern
Elasticity... allows us to analyze supply and demand with greater precision. is a measure of how much buyers and sellers respond to changes in market conditions THE ELASTICITY OF DEMAND The price elasticity
More informationElasticity. Demand is inelastic if it does not respond much to price changes, and elastic if demand changes a lot when the price changes.
Elasticity The price elasticity of demand measures the sensitivity of the quantity demanded to changes in the price. Demand is inelastic if it does not respond much to price changes, and elastic if demand
More informationElasticity and Its Application
Elasticity and Its Application Chapter 5 All rights reserved. Copyright 2001 by Harcourt, Inc. Requests for permission to make copies of any part of the work should be mailed to: Permissions Department,
More informationPROBLEM SET#3 PART I: MULTIPLE CHOICE
1 PROBLEM SET#3 PART I: MULTIPLE CHOICE 1. In general, elasticity is a measure of a. the extent to which advances in technology are adopted by producers. b. the extent to which a market is competitive.
More information2011 Pearson Education. Elasticities of Demand and Supply: Today add elasticity and slope, cross elasticities
2011 Pearson Education Elasticities of Demand and Supply: Today add elasticity and slope, cross elasticities What Determines Elasticity? Influences on the price elasticity of demand fall into two categories:
More information2 Price Elasticity of Demand
1 1.1 Goals of this class Goals of this class Expand on supply and demand: how much do quantities change in responses to: changes in price? changes in income? changes in price of related goods? Learn implications
More informationECON 202: Principles of Microeconomics. Chapter 6 Elasticity: The Responsiveness of Demand and Supply
ECON 202: Principles of Microeconomics Chapter 6 Elasticity: The Responsiveness of Demand and Supply Elasticity: The Responsiveness of Demand and Supply 1. Price elasticity of demand. 2. Determinants of
More informationElasticity and Its Application
Elasticity and Its Application Chapter 5 Elasticity... is a measure of how much buyers and sellers respond to changes in market conditions allows us to analyze supply and demand with greater precision.
More informationChapter 5 Elasticity of Demand and Supply. These slides supplement the textbook, but should not replace reading the textbook
Chapter 5 Elasticity of Demand and Supply These slides supplement the textbook, but should not replace reading the textbook 1 What is total revenue? Price multiplied by the quantity sold at that price
More informationTHE ELASTICITY OF DEMAND
In this chapter, look for the answers to these questions: What is elasticity? What kinds of issues can elasticity help us understand? What is the price elasticity of demand? How is it related to the demand
More informationElasticity. Definition of the Price Elasticity of Demand: Formula for Elasticity: Types of Elasticity:
Elasticity efinition of the Elasticity of emand: The law of demand states that the quantity demanded of a good will vary inversely with the price of the good during a given time period, but it does not
More informationAP MICRO Week 4 Practice Quiz: M, 20
1 1. A marketing survey shows that gate receipts would increase if the price of tickets to a summer rock concert increased, even though the number of tickets sold would fall. What does this imply about
More informationMFP SET. Lecture 3 Surplus: Consumer & producer Elasticity & its applications MFP SET 2000 1
MFP SET Lecture 3 Surplus: Consumer & producer Elasticity & its applications MFP SET 1 Consumer surplus! Willingness to pay: the maximum amount that a consumer will pay for a good! Consumer surplus: the
More informationElasticity. Ratio of Percentage Changes. Elasticity and Its Application. Price Elasticity of Demand. Price Elasticity of Demand. Elasticity...
Elasticity and Its Application Chapter 5 All rights reserved. Copyright 21 by Harcourt, Inc. Requests for permission to make copies of any part of the work should be mailed to: Permissions Department,
More informationSUPPLY AND DEMAND : HOW MARKETS WORK
SUPPLY AND DEMAND : HOW MARKETS WORK Chapter 4 : The Market Forces of and and demand are the two words that economists use most often. and demand are the forces that make market economies work. Modern
More informationMicroeconomics Instructor Miller Elasticity Practice Problems
Microeconomics Instructor Miller Elasticity Practice Problems 1. Price elasticity of demand measures A) how responsive suppliers are to price changes. B) how responsive sales are to changes in the price
More informationElasticity of Demand and Supply
Elasticity of Demand and Supply Price Elasticity of Demand (Ep) Calculating Percentage Change Significance of Price Elasticity of Demand (Ep) Determinants of Price Elasticity of Demand (Ep) For Next Time
More informationSample Exam Questions/Chapter 6. Use the following to answer question 1: Figure: The Demand for ebooks
Sample Exam Questions/Chapter 6 Use the following to answer question 1: Figure: The Demand for ebooks 1. (Figure: The Demand for ebooks) Look at the figure The Demand for ebooks. What is the price elasticity
More informationMeasuring Elasticity of Demand
C H A P T E R E I G H T P r i c e e l a s t i c i t y o f d e m a n d Measuring Elasticity of Demand Demand curves can have many different shapes and so it is important to derive a way to convey their
More informationRecitation #5 Week 02/08/2009 to 02/14/2009. Chapter 6  Elasticity
Recitation #5 Week 02/08/2009 to 02/14/2009 Chapter 6  Elasticity 1. This problem explores the midpoint method of calculating percentages and why this method is the preferred method when calculating price
More informationa. Meaning: The amount (as a percentage of total) that quantity demanded changes as price changes. b. Factors that make demand more price elastic
Things to know about elasticity. 1. Price elasticity of demand a. Meaning: The amount (as a percentage of total) that quantity demanded changes as price changes. b. Factors that make demand more price
More informationChapter 4: Elasticity. McTaggart, Findlay, Parkin: Microeconomics 2007 Pearson Education Australia
Chapter 4: Elasticity Objectives After studying this chapter, you will be able to: Define, calculate, and explain the factors that influence the price elasticity of demand Define, calculate, and explain
More informationExam: Principles Micro ECO 2023.U07 Fall 2009 Name
Exam: Principles Micro ECO 2023.U07 Fall 2009 Name Panther ID Instructions: 1. Please write in your name and Panther ID on the question paper. 2. Please Bubble in your name and Panther ID on the Scantron
More informationPrice Elasticity of Demand
rice Elasticity of Demand Demand A B The percentage change in the quantity demanded given...... a one percent change in the price. rinciples of Microeconomics & rinciples of Macroeconomics: Ch. 5 First
More informationElasticities of Demand and Supply
1 CHAPTER CHECKLIST Elasticities of Demand and Supply Chapter 5 1. Define, explain the factors that influence, and calculate the price elasticity of demand. 2. Define, explain the factors that influence,
More informationProblems: Table 1: Quilt Dress Quilts Dresses Helen 50 10 1.8 9 Carolyn 90 45 1 2
Problems: Table 1: Labor Hours needed to make one Amount produced in 90 hours: Quilt Dress Quilts Dresses Helen 50 10 1.8 9 Carolyn 90 45 1 2 1. Refer to Table 1. For Carolyn, the opportunity cost of 1
More informationEC130 FOUNDATIONS OF ECONOMIC ANALYSIS
EC130 FOUNDATIONS OF ECONOMIC ANALYSIS 20042005 DEARTMENT OF ECONOMICS UNIVERSITY OF WARWICK Topic 2 Market equilibrium Stability revisited Elasticity Tax Tax incidence Tax incidence and elasticity 1
More informationPrice. Elasticity. Demand
+ Price Elasticity of Demand + n Elasticity = measure the responsiveness of one variable to changes in another variable. n Price elasticity of demand measures the responsiveness of demand to changes in
More informationChapter 4. Elasticity
Chapter 4 Elasticity comparative static exercises in the supply and demand model give us the direction of changes in equilibrium prices and quantities sometimes we want to know more we want to know about
More informationELASTICITY AND ITS APPLICATION
5 ELASTICITY AND ITS APPLICATION WHAT S NEW IN THE FOURTH EDITION: There is a new In the News box that discusses the shortrun and longrun price elasticity of demand for gasoline. LEARNING OBJECTIVES:
More informationECON Chapter 4 review quiz
1) The price elasticity of demand measures: ECON 190002 Chapter 4 review quiz a) the percentage change in quantity demanded as a result of a 1 percent change in supply b) the change in quantity demanded
More informationTwo aspects of an elasticity are important: (1) whether it positive or negative and (2) whether it is greater than 1 or less than 1 in absolute value
Overview I. The Elasticity Concept  Own Price Elasticity  Elasticity and Total Revenue  CrossPrice Elasticity  Income Elasticity II. Demand Functions  Linear  LogLinear II. Regression Analysis
More informationChapter 10. Consumer Choice and Behavioral Economics
Chapter 10. Consumer Choice and Behavioral Economics Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 202 504 Principles of Microeconomics Utility Utility: the satisfaction people
More informationAP Microeconomics Chapter 4 Outline
I. Introduction A. Learning Objectives In this chapter students should learn: 1. What price elasticity of demand is and how it can be applied. 2. The usefulness of the total revenue test for price elasticity
More informationElasticity. Price elasticity of demand
lasticity Why cheap beer gives you gonorrhea, and other stories rice elasticity of demand The price elasticity of demand of a good measures the responsiveness of the quantity demanded of the good to changes
More informationName: Date: 2. When the price goes down, the quantity demanded goes up. This price elasticity measures how:
Name: Date: 1. The price elasticity of demand measures the responsiveness of the change in the: A) quantity demanded to a change in the price. B) price to a change in the quantity demanded. C) slope of
More informationPractice Questions Week 3 Day 1
Practice Questions Week 3 Day 1 Figure 41 Quantity Demanded $ 2 18 3 $ 4 14 4 $ 6 10 5 $ 8 6 6 $10 2 8 Price Per Pair Quantity Supplied 1. Figure 41 shows the supply and demand for socks. If a price
More informationTOPIC 4: ELASTICITY AND ITS APPLICATIONS
TOPIC 4: ELASTICITY AND ITS APPLICATIONS Dr Micheál Collins mlcollin@tcd.ie TOPIC 4: ELASTICITY AND ITS APPLICATIONS 1. Introduction 2. Price Elasticity of Demand Definition Categories Determinants Elasticity
More informationElasticity of demand 1
Elasticity of demand 1 Elasticity of demand What elasticity measures? How the price elasticity formula is applied to measure the elasticity of demand? The difference between elastic, inelastic and unitary
More informationMicroeconomics Instructor Miller Practice Problems Labor Market
Microeconomics Instructor Miller Practice Problems Labor Market 1. What is a factor market? A) It is a market where financial instruments are traded. B) It is a market where stocks and bonds are traded.
More informationElasticity and applications. Elasticity. Price elasticity of demand. Two demand curves 06.03.2012
Elasticity Elasticity and applications Law of demand: The demand curve is downwardsloping. As price rises quantity demanded falls, [as price falls quantity demanded rises]. Two markets: public transportation
More information10/1/2011 25% 25% 25% 25% Impact of lower price on total consumer expenditures or a firm s total revenue
Micro Chapter 7 Consumer Choice and Elasticity This chapter is an extension of the first part of Chapter 3 on demand and consumer theory Refer back to your Chapter 3 notes and mentally combine them with
More informationCASE FAIR OSTER 2012 Pearson Education, Inc. Publishing as Prentice Hall Prepared by: Fernando Quijano & Shelly Tefft
P R I N C I P L E S O F ECONOMICS T E N T H E D I T I O N CASE FAIR OSTER Prepared by: Fernando Quijano & Shelly Tefft of 3 Elasticity 5 CHAPTER OUTLINE Price Elasticity of Demand Slope and Elasticity
More informationEcon 110: Introduction to Economic Theory. 7th Class 2/4/11. recall the consumer's solution of their optimization problem from last time
Econ 110: Introduction to Economic Theory 7th Class 2/4/11 go over problem answers from last time continue with our discussion of consumer theory recall the consumer's solution of their optimization problem
More informationTo do today: S & D in algebra and introduction to elasticities
To do today: S & D in algebra and introduction to elasticities The math of S and D (linear curves) What is elasticity? Concept and calculation Determinants of elasticity 2011 Pearson Education Market Equilibrium:
More informationPrice Elasticity of Demand & Supply
13 10 Price Elasticity of Demand & Supply A. Price elasticity of demand Elastic demand (Ed > 1) % change in quantity demanded > % change in price Inelastic demand (Ed < 1) % change in quantity demanded
More informationA scenario. Elasticity. Price Elasticity of Demand. Price Elasticity of Demand. Elasticity and its Application
5 Elasticity and its Application R I N C I L E O F ECONOMIC F O U R T H E I T I O N N. G R E G O R Y M A N K I W remium oweroint lides by Ron Cronovich 2008 update Modified by Joseph Taoyi Wang 2008 outhwestern,
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
MBA 640 Survey of Microeconomics Fall 2006, Quiz 6 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly is best defined as a firm that
More informationElasticity. I. What is Elasticity?
Elasticity I. What is Elasticity? The purpose of this section is to develop some general rules about elasticity, which may them be applied to the four different specific types of elasticity discussed in
More informationLet us consider 2 points on a demand line/function, ( Q, P A A. Q, P ) =(1000,15). Then the formulae is just,
escribing emand and Supply Elasticities Objective: What is Elasticity of emand, how it is calculated and its usefulness. The relationship between slope, and elasticity. What is Income Elasticity of emand?
More informationPrinciples of Economics: Micro: Exam #2: Chapters 110 Page 1 of 9
Principles of Economics: Micro: Exam #2: Chapters 110 Page 1 of 9 print name on the line above as your signature INSTRUCTIONS: 1. This Exam #2 must be completed within the allocated time (i.e., between
More informationBasic idea. Chapter 3: Elasticity. but how much? I. Price Elasticity of Demand. % change in Qd. equation. Qs holding other factors constant
Chapter 3: Elasticity rice elasticity demand supply Cross elasticity Income elasticity Basic idea We know when d s holding other factors constant but how much? if price doubles how much does d fall? by
More informationSupply Elasticity. Professor Charles Fusi
Demand and Supply Elasticity Professor Charles Fusi Economists have estimated that if the price of satellite delivered TV services decreases by a certain percentage, the demand for cable TV falls by about
More informationPrice Elasticity of Demand
04 Elasticity Price Elasticity of Demand Measures buyers responsiveness to price changes Elastic demand Sensitive to price changes Large change in quantity Inelastic demand Insensitive to price changes
More informationd d Calculating Price Elasticity of Demand: The Midpoint or Arc Method
Microeconomics Topic 5: Discuss factors that determine demand and supply elasticity. Explain how demand and supply elasticity affect tax policy and the consequences of business decisions. Reference: Gregory
More informationCh. 6 Lecture Notes I. Price Elasticity of Demand 4. CONSIDER THIS A Bit of a Stretch
Ch. 6 Lecture Notes I. Price Elasticity of Demand A. Law of demand tells us that consumers will respond to a price decrease by buying more of a product (other things remaining constant), but it does not
More informationThe formula to measure the rice elastici coefficient is Percentage change in quantity demanded E= Percentage change in price
a CHAPTER 6: ELASTICITY, CONSUMER SURPLUS, AND PRODUCER SURPLUS Introduction Consumer responses to changes in prices, incomes, and prices of related products can be explained by the concept of elasticity.
More information10 : Theory of Demand
10 : Theory of Demand 1 Recap from last session Change in Demand Supply, Law of Supply Market Equilibrium Change in Equilibrium 2 A Shift in Both Supply and Demand Price of IceCream Cone Large increase
More information1. The Price Elasticity of Demand
UNIVERSITY OF CALIFORNIA, LOS ANGELES Department of Economics Cameron Economics 1 Lecture 4 Last day, we pinned down what economists mean by competition in the context of markets. We then looked at demand
More informationChapter 5: Elasticity and Its Application
Ch. 5: Elasticity and Its Application Why are breakfast foods cheaper than tobacco products? Elasticity: is a numerical measure of the responsiveness of quantity demanded or quantity supplied to one of
More informationMidterm Exam #2. ECON 101, Section 2 summer 2004 Ying Gao. 1. Print your name and student ID number at the top of this cover sheet.
NAME: STUDENT ID: Midterm Exam #2 ECON 101, Section 2 summer 2004 Ying Gao Instructions Please read carefully! 1. Print your name and student ID number at the top of this cover sheet. 2. Check that your
More informationQuestion 2: How are derivatives used to compute elasticity?
Question : How are derivatives used to compute elasticity? In economics, the term elasticity refers to the responsiveness of one economic variable to changes in another economic variable. The elasticity
More informationChulalongkorn University: BBA International Program, Faculty of Commerce and Accountancy
Chulalongkorn University: BBA International Program, Faculty of Commerce and Accountancy 2900111 (Section 1) Chairat Aemkulwat Economics I: Microeconomics Spring 2015 Solution to Selected Questions: CHAPTER
More informationElasticities of Demand
rice Elasticity of Demand 4.0 rinciples of Microeconomics, Fall 007 ChiaHui Chen September 0, 007 Lecture 3 Elasticities of Demand Elasticity. Elasticity measures how one variable responds to a change
More informationPreTest Chapter 18 ed17
PreTest Chapter 18 ed17 Multiple Choice Questions 1. (Consider This) Elastic demand is analogous to a and inelastic demand to a. A. normal wrench; socket wrench B. Ace bandage; firm rubber tiedown C.
More information#1: Supply and Demand
#1: Supply and Demand Answers: SD1) C. Substitution is when the price of a good falls, the consumer buys more of that good (instead of other goods), or when the price of a good rises, the consumer buys
More informationPrice Elasticity of Demand Example Questions
Price Elasticity of Demand Example Questions Review: First, a quick review of Price Elasticity of Demand from lecture on 0/9/09. The definition, of Price Elasticity of Demand PED) is: Price Elasticity
More informationManagerial Economics
Managerial Economics Unit 1: Demand Theory Rudolf WinterEbmer Johannes Kepler University Linz Winter Term 2012/13 WinterEbmer, Managerial Economics: Unit 1  Demand Theory 1 / 54 OBJECTIVES Explain the
More informationTHIRD EDITION. ECONOMICS and. MICROECONOMICS Paul Krugman Robin Wells. Chapter 6. Elasticity
THIRD EDITION ECONOMICS and MICROECONOMICS Paul Krugman Robin Wells Chapter 6 Elasticity What is the definition of elasticity? What is the meaning and importance of: price elasticity of demand? WHAT YOU
More information1.2 Elasticity: Price elasticity of demand (PED)
1.2 Elasticity: Price elasticity of demand (PED) Learning Outcomes Explain the concept of price elasticity of demand, understanding that it involves responsiveness of quantity demanded to a, along a given
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) If a producing firm does not have enough time to expand its plant capacity, it is: A)
More informationMicroeconomics Instructor Miller Practice Problems Monopolistic Competition
Microeconomics Instructor Miller Practice Problems Monopolistic Competition 1. A monopolistically competitive market is described as one in which there are A) a few firms producing an identical product.
More informationInstructor: Brian B. Young
Economics 212 Microeconomic Principles Exam No. 1 Date: 15 February 2012 Name The value of this exam is 100 points Instructor: Brian B. Young Please show your work where appropriate! Multiple Choice #1
More informationChapter 2 Microeconomic Principles. Demand. Demand Schedule. Demand Curve. Demand Curve. The Difference Between. Macroeconomics and Microeconomics
The Difference Between Macroeconomics and Microeconomics Chapter 2 Microeconomic Principles 2.1 The Difference between Macroeconomics and Microeconomics 2.2 Supply and Demand 2.3 Price Elasticity Macroeconomics
More informationPreTest Chapter 25 ed17
PreTest Chapter 25 ed17 Multiple Choice Questions 1. Refer to the above graph. An increase in the quantity of labor demanded (as distinct from an increase in demand) is shown by the: A. shift from labor
More informationhttp://ezto.mhecloud.mcgrawhill.com/hm.tpx
Page 1 of 17 1. Assume the price elasticity of demand for U.S. Frisbee Co. Frisbees is 0.5. If the company increases the price of each Frisbee from $12 to $16, the number of Frisbees demanded will Decrease
More information(P 2 P 1 )/[(P 1 + P 2 )/2]. It shows how flexible sellers are to a change in price.
September 15, 2008 Elasticity of supply The price elasticity of supply measures how quantity offered of a good responds to a change in the good s price. It is defined the same as price elasticity of demand,
More informationElasticity. Chapter 4. McGrawHill/Irwin. Copyright 2013 by The McGrawHill Companies, Inc. All rights reserved.
Elasticity Chapter 4 McGrawHill/Irwin Copyright 2013 by The McGrawHill Companies, Inc. All rights reserved. The Basics Markets Supply and Demand Scarcity Cost Benefit Incentive Comparative Advantage
More informationC H A P T E R 4: The Price System, Demand and Supply, and Elas ticity. The Price System: Rationing and Allocating Resources
C H A P T E R 4 The Price System, Demand and Supply, and Elasticity Prepared by: Fernando Quijano and Yvonn Quijano Karl Case, Ray Fair The Price System: Rationing and Allocating Resources The market system,
More informationExam 1. Corn (bushels)
ECONOMICS 10008 Dr. John Stewart Feb. 13, 2001 Exam 1 Instructions: Mark the letter for your chosen answer for each question on the computer readable answer sheet using a No.2 pencil. Please note that
More informationChapter 4: Elasticity. Monday, June 28 Tuesday, June 29
Chapter 4: Elasticity Monday, June 28 Tuesday, June 29 price PERFECTLY INELASTIC SUPPLY 100 90 80 70 60 50 40 30 10 0 0 10 30 40 50 60 70 80 90 100 quantity S=60 =1602P Quantity supplied doesn t depend
More informationELASTICITY Microeconomics in Context (Goodwin, et al.), 3 rd Edition
Chapter 4 ELASTICITY Microeconomics in Context (Goodwin, et al.), 3 rd Edition Chapter Overview This chapter continues dealing with the demand and supply curves we learned about in Chapter 3. You will
More informationElasticity and Its Uses
CHAPTER 4 Elasticity and Its Uses CHAPTER OVERVIEW One of the most practical uses of economic analysis is to predict the effects of changes in underlying conditions or policies on the prices and production
More information1. If the price elasticity of demand for a good is.75, the demand for the good can be described as: A) normal. B) elastic. C) inferior. D) inelastic.
Chapter 20: Demand and Supply: Elasticities and Applications Extra Multiple Choice Questions for Review 1. If the price elasticity of demand for a good is.75, the demand for the good can be described as:
More informationFIRST HOURLY EXAMINATION ECON 200 Spring 2008 Version B DAY AND TIME YOUR SECTION MEETS:
FIRST HOURLY EXAMINATION ECON 200 Spring 2008 Version B STUDENT'S NAME: STUDENT'S IDENTIFICATION NUMBER: DAY AND TIME YOUR SECTION MEETS: ENTER THE NUMBER 246531 UNDER "SPECIAL CODES" ON THE SCANTRON SHEET
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Midterm II ECO2301003 Spring2014 Name R# MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Hector has $1,000 a month to spend on clothing and food.
More informationAppendix B. Making Smart Choices
Appendix B Making Smart Choices Making Smart Choices The Law of Demand LEARNING OBJECTIVES B.1 Describe what determines your willingness to pay for a product/service B.2 Choice depends on marginal benefit,
More informationRutgers University Economics 102: Introductory Microeconomics Professor Altshuler Fall 2003
Rutgers University Economics 102: Introductory Microeconomics Professor Altshuler Fall 2003 Answers to Problem Set 10 Chapter 15 1. The following table shows revenue, costs, and profits, where quantities
More informationChapter 4 Elasticities of demand and supply. The price elasticity of demand
Chapter 4 Elasticities of demand and supply The price elasticity of demand measures the sensitivity of the quantity demanded of a good to a change in its price It is defined as: % change in quantity demanded
More informationCHAPTER 4 WORKING WITH SUPPLY AND DEMAND
CHAPTER 4 WORKING WITH SUPPLY AND DEMAND ANSWERS TO ONLINE REVIEW QUESTIONS 1. The rate of change along a demand curve measures how much one variable changes for every oneunit change in another variable.
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chapter 11 Perfect Competition  Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Perfect competition is an industry with A) a
More informationCHAPTER 4 APPLICATIONS OF SUPPLY AND DEMAND
CHAPTER 4 APPLICATIONS OF SUPPLY AND DEMAND I. CHAPTER OVERVIEW There is a common expression among people who think about economic issues: It s all a matter of supply and demand. This expression is, for
More informationChapter 3 Quantitative Demand Analysis
Managerial Economics & Business Strategy Chapter 3 uantitative Demand Analysis McGrawHill/Irwin Copyright 2010 by the McGrawHill Companies, Inc. All rights reserved. Overview I. The Elasticity Concept
More informationEcon 2113 Test 2A Pledge: I have neither given nor received aid on this exam.
Econ 2113 Test 2A Dr. Rupp Spring 2011 Name: Pledge: I have neither given nor received aid on this exam. Signature: Multiple Choice Identify the choice that best completes the statement or answers the
More informationEcon 202 Exam 1 Practice Problems
Econ 202 Exam 1 Practice Problems Principles of Microeconomics r. Phillip Miller Multiple Choice Identify the choice that best completes the statement or answers the question. Chapters 1 and 2 1. For an
More informationBUSINESS ECONOMICS CEC & 761
BUSINESS ECONOMICS CEC2 532751 & 761 PRACTICE MICROECONOMICS MULTIPLE CHOICE QUESTIONS Warning: These questions have been posted to give you an opportunity to practice with the multiple choice format
More informationUnit 2 test prep. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.
Class: Date: Unit 2 test prep Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Rapidly increasing health costs have been a major political concern for several
More informationPAGE 1. Econ 2113  Test 2 Fall 2003 Dr. Rupp. Multiple Choice. 1. The price elasticity of demand measures
PAGE 1 Econ 2113  Test 2 Fall 2003 Dr. Rupp Multiple Choice 1. The price elasticity of demand measures a. how responsive buyers are to a change in income. b. how responsive sellers are to a change in
More information