Chapter 5: Q.19 (page 130)
Would you usually expect elasticity of demand or supply to be higher in the short run or in the long run? Why?
In short run the demand is more elastic and supply is more elastic in long run.
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A storm destroys half the fava bean crop. Is this event more likely to hurt fava bean farmers if the demand for fava beans is very elastic or very inelastic? Explain.
What is the price elasticity of demand? Can you explain it in your own words?
Under which circumstances does the tax burden fall entirely on consumers?
What is the relationship between price elasticity and position on the demand curve? For example, as you move up the demand curve to higher prices and lower quantities, what happens to the measured elasticity? How would you explain that?
On a supply and demand diagram, show equilibrium price, equilibrium quantity and the total revenue received by the producers.
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