Worksheet 47
2. The market for tickets to the World Series has perfectly inelastic supply but the demand is relatively elastic. The government imposes a law that makes the teams involved sell the tickets for a price below the market equilibrium. Effect on: Price? Quantity? 3. More schools require students to buy and use calculators. Improved productivity shortens the time it takes to manufacture the calculators. Effect on: Price? Quantity? 4. Oil production declines due to a political crisis in the Middle East and the supply is relatively inelastic. People take more driving vacations, and the demand is relatively elastic. Effect on: Price? Quantity? 5. The government cuts the subsidy to tobacco farmers, as the supply is relatively elastic. More people quit smoking thOugh demand is relatively inelastic. Effect on: Price? Quantity? Worksheet 47.2: Elasticity Practice 1. Correctly fill in the blanks: effect so and a 1. When demand is unit elastic, the effect and the effect balance each other so a fall in has effect on total revenue. The Ed in this case equals 2. When demand is inelastic, the is greater than the that a decrease in price total revenue. The Ed here is 3. When demand is elastic, the effect is greater than the fall in price total revenue. The Ed here is II. Using the list of factors that determine elasticity, explain what the price elasticity of demand would be for the following. Elastic or . Product inelastic? Explanation Ballpoint Pen Crest Toothpaste A Gallon of Water Sugar Refrigerator A lifesaving medical treatment Diamond ring III. Draw a correctly labeled demand and supply graph based on these scenarios: 1. The market for widgets is demand elastic. Supply is relatively inelastic. The price of gadgets is rising and widgets are the perfect substitutes for gadgets. Effect on: Price? Quantity? Worksheet 47.1: Total Revenue and Elasticity Watch the video titled "Micro 2.9 Elasticity and the Total Revenue Test" by Jacob Clifford found at https://www.youtube.com/watch?v=HHcblIxiAAk. Answer the following questions: 1. Define the term: Elasticity of Demand. 2. When elasticity of demand is inelastic, is there a great or small responsiveness in demand to price changes? 3. What is the Elasticity of Demand Coefficient? 4. What is the Elasticity Coefficient of an inelastic good? 5. What is the shape of the curve if the good is perfectly inelastic? 6. When elasticity of demand is elastic, is there a great or small responsiveness in demand to price changes? 7. What is the shape of the curve if the good is perfectly elastic? 8. When elasticity of demand is elastic and price goes down, what happens to total revenue? 9. When elasticity of demand is inelastic and price goes up, what happens to total revenue
