Elasticity Applications — Practice Set 2

Income elasticity of demand is calculated as:

A good with income elasticity of +2.5 is:

If income elasticity is -0.8, the good is:

Cross-price elasticity of demand between two goods is positive. The goods are:

If the price of hot dogs rises 10% and the quantity of hot dog buns demanded falls 5%, the cross elasticity is:

Price elasticity of supply is generally ___ in the long run than the short run because:

A horizontal supply curve has price elasticity of supply equal to:

If supply is perfectly inelastic, a demand increase will:

Farmers often face inelastic demand for their crops. A bumper harvest will likely ___ total farm revenue.

Tax revenue from a per-unit tax is maximized when the taxed good has: