Econ homework 4
(T/F) If we observe that when the price of chocolate increases by 10%, total revenue increases by 10%, then demand for chocolate is unit price elastic
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T/F If demand is perfectly elastic, the demand curve is horizontal, and the price elasticity of demand equals 1
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T/F If the cross-price elasticity of demand for two goods is negative, then the two goods are substitutes
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T/F If we observe that when consumers incomes rise by 10%, the quantity demanded of ice cream increases by 5%, then ice cream is an inferior good
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T/F In general, demand curves for necessities tend to be price elastic
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T/F the price elasticity of demand as the percentage change in price divided by the percentage change in quantity demanded
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T/F Along the elastic portion of a linear demand curve, total revenue rises as price rises.
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T/F Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%. The price elasticity of demand for this good is equal to 2.0.
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T/F The cross-price elasticity of garlic salt and onion salt is -2, which indicates that garlic salt and onion salt are substitutes
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T/F The flatter the demand curve that passes through a given point, the more inelastic the demand.
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T/F When demand is inelastic, a decrease in price increases total revenue.
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T/F a linear, downward-sloping demand curve has a constant elasticity but a changing slope
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T/F Economics is the study of how evenly goods and services are distributed within society.
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(T/F) If we observe that when the price of chocolate increases by 10%, quantity demanded falls by 5%, then the demand for chocolate is price inelastic.
T
T/F If a firm is facing elastic demand, then the firm should decrease price to increase revenue
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T/F Cross-price of elasticity measures how the quantity demanded of one good changes as the price of another good changes
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T/F Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.
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T/F Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.
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T/F The cross-price elasticity of demand for bacon and eggs likely would be negative because bacon and eggs are complements for many people
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What is the price elasticity of demand at any point on a perfectly elastic demand curve?
infinity
What is the price elasticity of demand at any point on a perfectly inelastic demand curve?
zero
