Micro, Chapter 6 Reading

When quantity demanded is completely unresponsive to​ price, what is the value of price elasticity of​ demand?

0

For most​ products, the supply curve becomes increasingly inelastic the longer the period of time over which it is measured.

False

The demand curve for a luxury is less elastic than the demand curve for a necessity.

False

The more time that​ passes, the more inelastic the demand for a product becomes.

False

When demand curves​ intersect, the curve with the larger slope in absolute value​ (the steeper demand​ curve) is more elastic.

False

For which of the following products is the price elasticity of demand​ (in absolute​ value) the​ largest?

Tide liquid detergent

Firms often rely on market experiments to calculate the price elasticity of demand for a new product.

True

The more substitutes available for a​ product, the greater the price elasticity of demand.

True

If demand is perfectly​ elastic, then what is the effect of an increase in​ price?

a decrease in quantity demanded to zero

If the income elasticity of SUVs is greater than​ 1, what is the good​ considered?

a luxury

The price elasticity of supply always has

a positive value.

An increase in the price of a substitute for iPads will lead to​ __________ in the quantity of iPads​ demanded, so the​ cross-price elasticity of demand will be​ _________.

an​ increase; positive

How is the price elasticity of demand​ measured?

by dividing the percentage change in the quantity demanded of a product by the percentage change in the​ product's price

If Amazon.com raises its prices by 10 percent​ and, as a​ result, the quantity of books demanded on Barnesandnoble.com increases by 35​ percent, what do consumers consider the two Web sites to​ be?

close substitutes

If a 20 percent increase in the price of Red Bull energy drinks results in a decrease in the quantity demanded of 25​ percent, demand for Red Bull is​ _______ in this range.

elastic

What happens when the quantity demanded is very responsive to changes in​ price? The percentage change in quantity demanded will be

greater than the percentage change in price.

As you move up a linear demand​ curve, the price elasticity of demand in absolute value

increases.

The price elasticity of demand for a particular brand of raisin bran​ is, in absolute​ value,

larger than the price elasticity of demand for all breakfast cereals.

If a supply curve is a vertical​ line, it is​ ________, and if it is a horizontal​ line, it is​ ________.

perfectly inelastic and has an elasticity value of​ zero; perfectly elastic and has an elasticity value of infinity

From 1950 to​ 2012, wheat production in the United States increased​ dramatically, resulting in a substantial decline in wheat prices. Two key factors explaining this decline in prices are that the demand for wheat is​ ________, and the income elasticity of demand for wheat is​ ________.

price​ inelastic; low

On the lower part of a linear demand curve below the​ midpoint, the demand is​ ________ and raising the price causes total revenue to​ _________.

​inelastic; increase

In​ general, the demand for a good will be​ _________ elastic the​ ___________ the share of the good in the average​ consumer's budget.

​less; smaller

When demand​ increases, equilibrium price will rise​ ____________ when supply is​ _________ elastic.

​more; less

The income elasticity of demand for a normal good is​ _____ and for an inferior good is​ ______.

​positive; negative