ECON 200 Elasticity Solution
Elasticity
Generally, we calculate elasticity as the:
percentage change in price divided by the percentage change
... [Show More] in quantity demanded/supplied.
change in quantity demanded/supplied divided by the change in price.
percentage change in quantity demanded/supplied divided by the change in price.
percentage change in quantity demanded/supplied divided by the percentage change in price.
Elasticity differs from slope as a measure of responsiveness to changes in prices because:
elasticity changes depending on the currency prices are measured in, but this does not affect slope.
percentage changes do not depend on the units of measurement, whereas slope does.
elasticity is only useful for describing demand, but slope is useful for describing demand and supply.
slope is always negative, while elasticity is not.
For which of the following products is demand likely to be the most inelastic?
Flat screen TV
Table salt
Sports car
In-ground hot tub
The demand for Gold Toe socks is likely to be more elastic than the demand for power tools because:
power tools in general have more substitutes than Gold Toe socks.
power tools in general are more expensive than Gold Toe socks.
Gold Toe socks have more substitutes than power tools in general.
Gold Toe socks are more expensive than power tools in general.
For which of the following products is demand likely to be the most elastic?
All gym shoes
All shoes
Converse All Star sneakers
All clothing items
If nicotine in cigarettes is highly addictive, why would it make economic sense for producers of cigarettes to offer free samples of their products to young adults?
The free samples will make demand more elastic in the long run.
The free samples will teach young adults there is such a thing as a free lunch.
The free samples will help get people addicted to nicotine, which makes demand less elastic.
The free samples will make supply less elastic so people know there will be cigarettes.
The passage of time increases the elasticity of demand for many goods because:
time allows people to earn more income.
time allows price to fluctuate so that consumers will get to pick the price they like.
time allows people to produce more of the goods.
time allows people to discover more substitutes for goods.
If a state decided to place a tax on home heating oil, over time:
demand would become less elastic and tax revenue would decline.
demand would become more elastic and tax revenue would decline.
demand would become more elastic and tax revenue would increase.
demand would become less elastic and tax revenue would increase.
Identify the item most likely to be a luxury good among the four mystery items:
Item A: price elasticity of demand = -2.3
Item B: price elasticity of demand = -1.0
Item C: price elasticity of demand = -0.8
Item D: price elasticity of demand = -0.2
The market supply curve is:
perfectly inelastic in the long run but not the short run.
perfectly elastic in the short run but not the long run.
less elastic in the long run than in the short run.
more elastic in the long run than in the short run. [Show Less]
