MICRO elasticity
Ceteris Paribus, which of the following causes demand to be more elastic with respect to price: -shorter periods of time to adjust to a change in price -a steeper demand curve for a given price and quantity -Fewer substitutes -A high ratio of price to income
A high ratio of priced income. Price elasticity of demand tends to be higher for goods with a relative high price when the availability of substitutes is high, and over a long period of time
Which of the following is likely to have the most inelastic price elasticity of demand: automobiles, pick up trucks, Hondas, the Hondas that one Honda dealer sells?
Automobiles. The greater the availability of substitutes, the higher the price elasticity of demand.
Which of the following would most likely have a price elasticity coefficient less than one: coffee, televisions, fresh fish, new cars?
Coffee. The greater the availability of substitutes the higher the price elasticity of demand. When coffee prices rise consumers don't reduce their purchases.
When the percentage change in quantity demanded is less than the percentage change in price, ceteris paribus, is demand elastic, in elastic, unitary elastic, or impossible to calculate?
Demand is in elastic, price elasticity is less than 1
If the price elasticity of demand is equal to 2, the good has _____ demand (elastic, inelastic, unitary elastic, restrictive?
Elastic. If the price elasticity of demand is greater than one demand is elastic. Consumer response is large relative to the change in price
Demand is more price elastic: - in the long run -if the product is a necessity -if the product is a small part of the consumers budget -If the product has very few substitutes
In the long run. In the long run consumers can usually find other substitutes
Ceteris Paribus, As the number of substitutes for a good increases the price elasticity of demand should become: - smaller - larger - cross price become negative - Income elasticity become negative
Income elasticity become negative?Pricey last history of dementia become larger. The greater availability of substitutes the higher the price elasticity of demand
Which of the following products will have more inelastic demand: New cars, fresh flowers, fast food, medicines?
Medicines. Demand is more inelastic if there are fewer substitute goods
Ceteris Paribus, The longer the time, the: -smaller the income elasticity -less elastic the demand -more unitary elastic the demand is More elastic the demand for the good
More elastic the demand for the good. The long run price elasticity of demand is higher than the short run elasticity
Total revenue equals (formula)
Quantity sold times price
If demand is very in elastic the demand curve will be (flat, horizontal, very steep, or upward sloping?)
The demand curve will be very steep
If the price elasticity of demand for cigarettes is .4, is the demand elastic or inelastic)
The demand is inelastic
Total revenue is equal to: (the income from sales, profit, cost of production, total revenue minus total cost)
The income from sales. Total revenue is equal to prize times quantity sold and is also a company's income from sales
When demand is inelastic, the percentage change in price is greater than it less than the percentage change in quantity demanded?
The percentage change in price is greater than the percentage change in quantity demanded
The price elasticity of demand is equal to (formula)
The percentage change in quantity demanded divided by the percentage change in price
If the demand for a product is elastic, then the percentage change in quantity demanded is greater than or less than the percentage change in price?
The percentage change in quantity demanded is greater than the percentage change in price
If demand is elastic then: - an increase in price will reduce total revenue total - revenue equals price times quantity - an increase in price will increase total revenue - a decrease in price will reduce total revenue - a decrease in price will have no effect on total revenue
Total revenue equals price times quantity
Which of the following products will have elastic demand: gasoline, cigarettes, travel souvenirs, alcohol?
Travel souvenirs. Products that have elastic demand have a lot of substitutes and take a larger percentage of their income
A demand curve that is perfectly inelastic is (horizontal or vertical?)
Vertical
If demand is perfectly elastic, the demand curve is (horizontal or vertical)
horizontal