1. Define the price elasticity of demand and the income elasticity of demand.
2. List and explain some of the determinants of the price elasticity of demand.
3. If the elasticity is greater than 1, is demand elastic or inelastic? If the elasticity equals 0, is demand perfectly elastic or perfectly inelastic?
4. On a supply-and-demand diagram, show equilibrium price, equilibrium quantity, and the total revenue received by producers.
5. If demand is elastic, how will an increase in price change total revenue? Explain.
6. What do we call a good whose income elasticity is less than 0?
7. How is the price elasticity of supply calculated? Explain what this measures.
8. What is the price elasticity of supply of Picasso paintings?
9. Is the price elasticity of supply usually larger in the short run or in the long run? Why?
10. In the 1970s, OPEC caused a dramatic increase in the price of oil. What prevented it from maintaining this high price through the 1980s?
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