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Study Guide Test 2

# Study Guide Test 2 - C hapter 4 4.1 What is the elasticity...

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Chapter 4: 4.1: What is the elasticity of demand for season ski passes? When the price of a season ski pass is \$400, buyers wish to purchase 10,000 passes per year; but when price falls to \$380, the quantity demanded rises to 12,000 passes per year. At the original price, what is the price elasticity of demand for ski passes? Is the demand for ski passes elastic with respect to price? 4.2: What is the price elasticity of demand when P=4 on the demand curve in Figure 4.4? For the demand curves, D 1 and D 2 shown in Figure 4.5, calculate the price elasticity of demand when P=4. What is the price elasticity of demand on D 2 when P=1?

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4.3: If a 10 percent increase in income causes the number of students who choose to attend private universities go up by 5 percent, what is the income elasticity of demand for private universities?
4.4: For the supply curve shown in Figure 4.13, calculate the elasticity of supply when P=6. 1. Why does a consumer’s price elasticity of demand for a good depend on the fraction of the consumer’s income spent on that good? 2. Why does the price elasticity demand for a good decline as we move down along a straight-line demand curve?

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