Figure 7-13
Refer to . If price increases from $10 to $15, total revenue will
a.
increase by $20, so demand must be inelastic in this price range.
b.
increase by $5, so demand must be inelastic in this price range.
c.
decrease by $20, so demand must be elastic in this price range.
d.
decrease by $10, so demand must be elastic in this price range.
a
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Refer to the scenario above. What is the absolute value of Gary's arc elasticity of demand for shirts?
A) 1.2 B) 2.14 C) 3.26 D) 5
Suppose elasticity of demand is 0.2, elasticity of supply is 0.7, and a 10 percent excise tax is levied on producers. Which of the following changes will reduce the share of the tax paid by consumers?
A. Elasticity of demand falls to 0.1. B. Nothing will change the burden of the tax. C. Elasticity of supply falls to 0.3. D. The tax is increased to 20 percent.