microchapter5 - RikkiNorton Microeconomics Chapter5

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Rikki Norton Microeconomics Chapter 5 Questions for Review (1, 2, 6, 8, 9, 10) 1. If the demand is elastic then as the price rises the total revenue will fall. This will happen  because the reduction in the quantity demanded is so great that it more than offsets the  increase in price.  2. Elasticity helps explain drug interdiction because it shows how it may increase in the short  run however down the road on the long run it will end up decreasing the use of illegal drugs and  the drug-related crimes. 6. Price elasticity of supply is calculated by taking percentage change in quantity supplied  divided by the percentage change in price. It measures how much the quantity supplied  responds to changes in the price. 8. Since no more paintings can be made by Picasso, the price elasticity of supply would be  zero.  9. The four determinants of the price elasticity of demand are: Availability of close substitutes,  necessities versus luxuries, definition of the market, and time horizon.  The availability of close 
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This note was uploaded on 03/14/2011 for the course POLSCI 1123 taught by Professor Thompson during the Spring '11 term at Oklahoma State.

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microchapter5 - RikkiNorton Microeconomics Chapter5

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