Exam #2 (Chapter 5)
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 decrease in the quantity demanded
False
When a supply curve is relatively flat, the supply is relatively elastic
true
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
Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to change in price, the demand curve will be steeper.
False
For a horizontal demand curve, slope is undefined and elasticity equal 0.
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 quantity supplied is the same regardless of price, then the supply curve would be elastic
False
If the quantity supplied responds only slightly to changes in price, then supply is said to 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 cure 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 larges 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
Demand is unit elastic if elasticity if elasticity is less than 1
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
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
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
