Economics practice problems chapter 5
If a 15 percent increase in price causes a 30 percent decrease in quantity demanded, this product might have no close substitute.
false
If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is 1/2 and supply is elastic.
false
If sellers do not respond at all to a change in price, technological advancement must be great.
false
If the elasticity of supply is zero, then supply is very elastic.
false
If the elasticity of supply of a product is 2.5, we know that supply is inelastic.
false
If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price would result in a 4.0 percent decrease in the quantity demanded.
false
If the quantity supplied responds only slightly to changes in price, then supply is said to be elastic.
false
If the quantity supplied is the same regardless of price, then the supply curve would be elastic.
false
In general, elasticity is the friction that develops between buyers and sellers in a market.
false
The elasticity of a perfectly elastic supply curve equals 0.
false
The greater the price elasticity of demand the more likely the product is a necessity.
false
The price elasticity of supply measures how much the quantity supplied responds to changes in input prices.
false
When quantity demanded responds only slightly to changes in price, demand is said to be unit elastic.
false
A decrease in supply will cause the largest increase in price when both supply and demand are inelastic.
true
Alice says that she would buy one banana split a day regardless of the price. If she is telling the truth, Alice's demand for banana splits is perfectly inelastic.
true
As elasticity rises, the supply curve gets flatter.
true
As the elasticity of supply approaches infinity, very small changes in price will lead to very large changes in quantity supplied.
true
Concerning a vertical supply curve, suppliers will not respond to a change in price.
true
Demand for a good would tend to be more inelastic the fewer the available substitutes.
true
Demand is inelastic if elasticity is less than 1.
true
Demand is said to be unit elastic if quantity demanded changes by the same percent as the price.
true
If two supply curves pass through the same point and one is steep and the other is flat, the steeper supply curve is more inelastic.
true
Suppose the price elasticity of demand for basketballs is 1.20. A 15 percent increase in price will result in an 18 percent decrease in the quantity of basketballs demanded.
true
The difference between slope and elasticity is that slope measures actual changes and elasticity measures percentage changes.
true
The main determinant of the price elasticity of supply is time.
true
The price elasticity of demand measures a buyer's responsiveness to a change in the price of a good.
true
When a supply curve is relatively flat, the supply is relatively elastic.
true
Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the demand curve will be steeper.
false
For a horizontal demand curve, slope is undefined and elasticity equals 0.
false
A good will have a more inelastic demand the greater the availability of close substitutes.
false
Chocolate Chip Cookie Dough ice cream would tend to have very elastic demand because it must be eaten quickly.
false
Demand is elastic if elasticity is less than 1.
false
Demand is said to be elastic if the price of the good responds substantially to changes in demand.
false
Demand is unit elastic if elasticity is less than 1.
false