Elasticity
Using absolute values in the elastic range of the demand curve,:
% change in quantity demanded > % change in price.
The formula for price elasticity of demand is:
% change in quantity demanded/% change in price.
When the product price falls from $80 to $60, the quantity demanded rises from 500 to 800 units. Using the simple formula the price elasticity of demand in this range is:
-2.40.
According to cross-price elasticity when two goods are substitutes, if the price of good A increases, then the demand for good B ______. (one word)
increases
A price elasticity of demand that is calculated as -0.61 would be considered _________
inelastic
The more broadly a market is defined, the relatively more _________ demand will be. Listen to the complete question
inelastic
When demand is __________ , consumers are less responsive to changes in prices.
inelastic
When the proportion of income spent on a good or service is relatively low, demand is relatively more ________
inelastic
When the proportion of income spent on a good or service is relatively low, demand is relatively more __________
inelastic
If |Ed| = 0.25, the demand is:
inelastic.
The slope of a linear demand curve:
is constant along the curve.
Businesses are interested in the price elasticity of demand because:
it allows them to estimate the potential changes in the quantity demanded associated with changes in the prices of their products.
The greater the change in price, the __________ reliable the elasticity estimate is going to be.
less
The _____________ range of the linear demand curve is relatively less elastic.
lower
The price elasticity of demand is often turned into a positive number to:
make the number easier to work with when determining whether the demand is elastic inelastic or unit-elastic.
_____________ definition influences the number of substitutes.
market
If the price of good A increases and generates a decrease in the quantity of good B demanded, then the cross-price elasticity of demand is ____________
negative
Cross-price elasticity of demand uses:
negative and positive values to determine if goods are substitutes or complements.
If the price of good A increases and generates an increase in the demand for good B, then the two goods are:
substitutes.
Along the elastic range of the demand curve,:
the percentage change in quantity demanded is greater than the percentage change in price.
Along the inelastic range of the demand curve,:
the percentage change in quantity demanded is less than the percentage change in price
Businesses can estimate the potential changes in the quantity demanded associated with changes in the prices of their products by using:
the price elasticity of demand.
Price elasticity of demand is a measure of how responsive:
the quantity demanded is to a change in price.
If the price of coffee decreases by 50%, causing the quantity demanded of tea to decrease by 20%, then the cross-price elasticity for coffee and tea is:
0.4
Suppose the cross-price elasticity of travelling by bus and travelling by train is 0.7. If the price of traveling by bus increases by 40%, how much would the quantity of traveling by train change?
28%
Suppose the cross-price elasticity of beef and pork is 0.3. If the price of beef increases by 25%, the quantity of pork demanded would change by __________ %. (Only enter the number; the % sign is there for you.)
7.50
Select all that apply Economists find elasticity useful because it:
can be used to compare elasticities across countries, has no units attached to it and can be used to compare elasticities across different producers.
The price elasticity of demand ____________ as you move along the demand curve.
changes
When consumers have more time to adjust, demand becomes relatively more
elastic
the price elasticity of demand.
elastic.
In economics, elasticity:
applies to any two variables.
Whether a good or a service is a luxury or a necessity is determined by the ___________-
buyer
Whether a good or a service is a luxury or a necessity is determined by the ____________
buyer
When the product price rises from $150 to $200, the quantity demanded falls from 1000 to 800 units. Using the simple standard (non-midpoint) formula, the price elasticity of demand in this range is:
-0.60.
Which of the following uses negative and positive values to assess whether goods are substitutes or complements?
Cross-price elasticity
With cross-price elasticity of demand,:
the sign helps determine whether the goods or services are substitutes or complements.
When the product price falls from $80 to $60, the quantity demanded rises from 500 to 800 units. The slope in this range is:
-0.067
When the product price falls from $90 to $80, the quantity demanded rises from 600 to 700 units. The price elasticity of demand is _____.
-1.5
If the price of peanut butter increases by 25%, causing the quantity demanded of almond butter to rise by 5%, then the cross-price elasticity for peanut butter and almond butter is:
0.2
Select all that apply Which of the following statements are true?
1) The elasticity calculation uses percentage changes in price and quantity. 2) A relationship exists between slope and elasticity but they are not the same thing. Slope uses changes in price and quantity.
In terms of proportion of income spent on the item, place the following items in order from least elastic (most inelastic) to most elastic. The least elastic item should be placed on top/first in the list.
1. Bottle of water 2. Clothing 3. Computer 4. Luxury Vacation
Select all that apply Which of the following is true?
1. Price elasticity of demand and slope are not always the same along a non-linear demand curve. 2. Price elasticity of demand and slope are not always the same along a linear demand curve.
Which of the following is true?
1. Price elasticity of demand and slope are not always the same along a non-linear demand curve. 2. Price elasticity of demand and slope are not always the same along a linear demand curve.
Select all that apply Which of the following statements are true?
1. Slope uses changes in price and quantity. 3. The elasticity calculation uses percentage changes in price and quantity. 2. A relationship exists between slope and elasticity but they are not the same thing.
A price elasticity of demand of -1.25 means that if price decreases by 10% the quantity demanded will _____________ by ______________%. (Please do not add the % sign. It is already there in the probe.) (Enter one word in the first blank and a number in the second blank.)
1. increase 2. 12.5
A price elasticity of demand of -0.75 means that if the price decreases by 10% the quantity demanded will ____________ (one word) by ___________% (Use a number. % sign is already supplied).
1. increase 2. 7.5
Suppose that the quantity of umbrellas demanded at a price of $6 is 3,000 units. The company's total revenue is $_____________. (Only enter the number; dollar sign is provided.)
18000
Suppose that the quantity of umbrellas demanded at a price of $8 is 2,500 units. The company's total revenue is $____________.
20000
When supply changes, if the demand is relatively inelastic, the demand curves will tend to be flatter than if the demand is relatively elastic. (True or false)
True
When two goods are complements, the cross-price elasticity of demand is negative. (True or False)
True
Whether a good or a service is a luxury or a necessity is determined by the __.
buyer
The slope of a linear demand curve is _____ along the curve.
constant
If we want to evaluate the effect of a change in price of one good on the quantity demanded of a different good we use:
cross-price elasticity of demand.
If we want to evaluate the effect of a change in price of one good on the quantity demanded of a different good, we use:
cross-price elasticity of demand.
According to cross-price elasticity of demand, when two goods are complements, if the price of good A increases, then it generates a(n) _____________in the demand for good B.
decrease
If demand is inelastic, decreasing prices will ________ total revenue.
decrease
If demand is inelastic, ______________ prices will decrease total revenue
decreasing
When two goods are substitutes, if the price of good A increases,:
demand for good B increases.
If demand is __________ increasing prices will decrease total revenue.
elastic
In the ___________-(one word) range of the demand curve, the percentage change in quantity demanded is greater than the percentage change in price.
elastic
In the _________________(one word) range of the demand curve, the percentage change in quantity demanded is greater than the percentage change in price.
elastic
The more a good or a service is considered to be a luxury, the relatively more __________- demand will be.
elastic
When the proportion of income spent on a good or service is relatively more, demand is relatively more _______
elastic
Which item would be considered the most elastic?
elastic
If the price elasticity of demand (|Ed|) equals 1.25, the demand is:
elastic.
__________ is a measure of how responsive one variable is to a change in another variable.
elasticity
In economics, a measure of how responsive one variable is to a change in another variable is:
elasticity.
The __________ the change in price, the less reliable the elasticity estimate is going to be.
higher
The price elasticity of demand is often turned into a positive number to:
identify whether the demand is elastic inelastic or unit-elastic.
In the ____________(elastic/inelastic) range of the demand curve, the percentage change in quantity demanded is less than the percentage change in price.
inelastic
The more a good or a service is considered to be a necessity, the relatively more ____________ demand will be.
inelastic
When demand is inelastic, consumers are ____________ responsive to changes in prices.
less
If the price of good A increases and generates an increase in the quantity of good B demanded, then cross-price elasticity of demand is:
positive
With cross-price elasticity of demand,:
positive value indicates substitutes and negative value indicates complements.
If demand is inelastic, increasing prices will _____________ total revenue.
price
Cross-price elasticity of demand is a measure of the effect of a change in the:
price of one product on the quantity demanded of another.
Cross-price elasticity of demand is a measure of the responsiveness of a change in the:
price of one product to the quantity demanded of another product.
Price elasticity of demand is influenced by the _____ income spent on a good or service.
proportion of
When the proportion of income spent on a good or service is relatively ______________, demand is relatively more inelastic.
small
When two goods are ___________, cross-price elasticity of demand is positive.
substitutes
When consumers have less ____________ to adjust, demand becomes relatively inelastic.
time
If |Ed| = 1.00, the demand is:
unit-elastic.
The _________ range of the linear demand curve is relatively more elastic.
upper
The ____________ range of the linear demand curve is relatively more elastic.
upper
Temperature elasticity of demand would be useful if:
you owned an ice cream business.
Suppose the price of movie tickets decreases by 4%, causing the quantity demanded of popcorn to increase by 10%. What would the cross-price elasticity for movie tickets and popcorn be in this example?
−2.5
Suppose the price of milk increases by 15%, causing the quantity demanded of cereal to decrease by 45%. What would the cross-price elasticity for milk and cereal be in this case?
−3
If the cross-price elasticity of hamburgers and ketchup is −0.6, and the price of hamburgers increases by 50%, how would be the percentage change in the quantity of ketchup demanded?
−30%
A cross-price elasticity of demand of 1.25 means that if the price decreases by 10%, the quantity demanded will _________ by ________%. (Only enter the number; the % sign has been provided for you.)
Blank 1: decrease or fall Blank 2: 12.5 or 12.50
A cross-price elasticity of demand of -0.50 means that if the price of good A increases by 1%, the quantity demanded of good B will by %. (Only enter the number; the % sign has been provided for you.)
Blank 1: decrease, fall, or drop Blank 2: .5, 0.50, or 0.5
A price elasticity of demand of -1.25 means that if the price increases by 1% the quantity demanded will _______(one word) by ______________%. (Percentage sign is already supplied; do not add it to your answer.)
Blank 1: decrease, fall, or drop Blank 2: 1.25
A cross-price elasticity of demand of 1.25 means that if the price of A increases by 1%, the quantity demanded of good B will _________ by ___________%. (Only enter the number; the % sign has been provided for you.)
Blank 1: increase or rise Blank 2: 1.25
A cross-price elasticity of demand of 1.25 means that if the price of A increases by 1%, the quantity demanded of good B will ____________ by _________%(Only enter the number; the % sign has been provided for you.)
Blank 1: increase or rise Blank 2: 1.25
A cross-price elasticity of demand of 0.75 means that if the price of good A increases by 10%, the quantity demanded of good B will by %. (Only enter the number; the % sign has been provided for you.)
Blank 1: increase or rise Blank 2: 7.5 or 7.50
Which of the following uses negative and positive values to asses whether goods are substitutes or complements?
Cross-price elasticity
