Economics Exam 3- with graphs

The owner of a local hot dog stand has estimated that if he lowers the price of hot dogs from​ $2.00 to​ $1.50, he will increase sales from 400 to 500 hot dogs per day.

Using the midpoint​ formula, the demand for hot dogs is

Perfectly inelastic demand occurs when the quantity demanded does not respond at all to a change in price.

Which of the following best describes a perfectly inelastic demand​ curve?

Explain whether demand is likely to be elastic or inelastic for

insulin.

The ABC Computer Company wants to increase the quantity of computers it sells by​ 5%.

If the price elasticity of demand is −​2.5, the company must

1 of 3

Would you recommend that Apple raise or lower its price for the iWatch to increase​ revenue?

2 of 3

Would you recommend that florists raise their prices for roses on​ Valentine's Day if their only goal is to increase​ revenues?

3 of 3

Would you recommend that electronic cigarette vendors cut prices to increase​ revenues?

When the quantity demanded does not respond at all to a change in​ price, the demand curve is _____________________.

When the quantity demanded drops to zero at the slightest increase in​ price, the demand curve is ______________________.

% change is Quantity x Elasticity = % change in price

% change in price x elasticity = % change in quantity

% change in quantity / % change in price = elasticity

Every year Christmas tree vendors bring tens of thousands of trees from the forests of New England to New York City and Boston. During the last two​ years, the market has been very​ competitive; as a​ result, price has fallen by 10 percent. If the price elasticity of demand was

−​1.3, vendors would lose revenues altogether as a result of the price decline

Suppose price decreases and demand is perfectly inelastic.

What happens to total​ revenue?

During the 1992 Democratic National​ Convention, a group of 100 New York restaurants got together and offered lunch for​ $19.92, and a number of them added special dinner menus with meals priced at​ $24.92. These prices may sound high to​ you, but they were a substantial reduction in price for most of the participating restaurants. This resulted in increased revenues during the convention. After the​ convention, many restaurants decided to keep their prices down and got a real​ surprise: lower prices brought in more total revenue.

How can elasticity be described in these New York​ restaurants?

he quantity of peanuts demanded increases from 6 pounds to 9 pounds when the price of peanuts decreases from​ $4 per pound to​ $3 per pound. The percentage change in the quantity of peanuts demanded is...

- - - -

The quantity of peanuts demanded increases from 6 pounds to 9 pounds when the price of peanuts decreases from​ $4 per pound to​ $3 per pound. The percentage change in the price of peanuts is....

The price elasticity of demand for bottled water in New York is

−​3, and the price elasticity of demand for bottled water in Florida is −0.6. In other​ words, demand in New York is​ ________ and demand in Florida is​ ________.

The price elasticity of demand for heart transplants is perfectly inelastic.

​

Thus, the price elasticity demand for heart transplants is

The above figure represents the market for pumpkins both before and after the imposition of an excise​ tax, which is represented by the shift of the supply curve.

The amount the store owners will receive per pumpkin after paying the tax is

The above figure represents the market for pumpkins both before and after the imposition of an excise​ tax, which is represented by the shift of the supply curve.

The amount customers will pay per pumpkin after the imposition of the tax is

The above figure represents the market for pumpkins both before and after the imposition of an excise​ tax, which is represented by the shift of the supply curve.

The amount by which the store owners will raise the price of pumpkins after the imposition of the tax is​ ________ per pumpkin.

Suppose a firm pays ​$3,250 per month to operate in the short run. From this​ amount, ​$1,550 is spent on costs that do not change regardless of the level of the​ firm's output. What are total variable costs for this​ firm?

Total variable costs are

​$_________

​(Enter your response as an

integer.​)

Marginal cost (MC​) measures:

Prior to​ 2005, it seemed like house prices always rose and never fell. When the demand for housing​ increases, prices in the housing market rise but not always by very much. For prices to rise​ substantially, the supply of housing must be relatively inelastic. That​ is, if the quantity supplied increases rapidly whenever house prices​ rise, price increases will remain small. Many have suggested government policies to increase the elasticity of supply.

What specific policies might hold prices down when demand​ increases?

Which of the​ following, if

true​, would most effectively undermine the argument that raising cigarette taxes reduce the number of people who smoke​ cigarettes?

In order to discourage consumers from consuming sugary soft​ drinks, the government is considering placing a tax on sugary soft drink sales. Which of the following statements is true​?

The Lawn​ Ranger, a landscaping​ company, has total costs of​ $4,000 and total variable costs of​ $1,000.

The Lawn​ Ranger's total fixed costs are

Amy spends​ $5,000 on remodeling a storefront that she then opens as a​ take-out deli. Business has not been very​ successful, and she needs an additional​ $1,000 to keep the deli open.

Which of the following is true​?

If this farmer is producing the

profit−maximizing

level of​ output, her total revenue is...

If this farmer produces the

profit−maximizing

level of hay when the market price is​ $18 per​ bale, her total cost would be..

If this farmer produces the

profit−maximizing

quantity when the market price is​ ________, her profit is​ $0.