ECON. 2302 CH 5

The price elasticity of demand is measured by:

dividing the percentage change in quantity demanded by the percentage change in price.

The percentage change in quantity demanded divided by the percentage change in income, all other things unchanged, is:

income elasticity of demand.

The price elasticity of supply measures:

the responsiveness of quantity supplied to changes in prices

Which factor is the most important in determining the price elasticity of supply?

the time period the producer has to adjust inputs and outputs

For an inferior good, income elasticity of demand will be:

negative.

The concept of cross price elasticity of demand refers to the:

ratio of the percentage change in the quantity demanded of a good at a specific price to the percentage change in the price of a related good.

(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.50 and $2.25?

B) -19

When the percentage change in quantity demanded is larger than the percentage change in price, demand is said to be:

C) price elastic

The percentage change in quantity demanded of one good or service divided by the percentage change in the price of a related good or service is:

D) cross price elasticity of demand

The ratio of the percentage change in a dependent variable to the percentage change in an independent variable, all other things unchanged, is:

elasticity

Income elasticity of demand measures:

how demand for a good changes in response to changes in income.

If the absolute value of price elasticity is greater than 1, this means the demand curve in that region is:

price elastic

Supply curves tend to be more ________ the greater the time period facing the producer.

price elastic

A constant price elasticity of demand curve is one whose:

price elasticity of demand is the same at every point on the curve.

The ratio of the percentage change in the quantity demanded to the percentage change in price, all other things unchanged, is:

price elasticity of demand.

If the price elasticity of supply is less than 1, then supply is:

price inelastic

If the price elasticity of demand is found to be -3/4, then demand is:

price inelastic.

The arc price elasticity of demand method is best used for:

small changes in price

If the price elasticity of supply is greater than 1, then:

supply is price elastic

A demand curve that is perfectly inelastic:

will be vertical