ECON Mirco Elasticity
A horizontal straight line is
A perfectly elastic supply curve
The price elasticity of demand is
always negative
Two items which have a positive cross price elasticity of demand are referred to as
substitutes
Supply is more elastic in the long run
than in short run
A perfectly elastic demand curve exhibits
that quantity demanded will decrease to zero when there is a slight increase in the price level
When the supply curve slopes upward
the price elasticity of supply is positive
Substitute goods
the price of one good increases and the demand for another good increases
The slope of the perfectly inelastic demand curve is
undefined
If a good has an absolute price elasticity of 1, the demand for the good is
unit elastic
If the absolute value of the price elasticity of demand for a product is 1.5, and the price of a product increased 30 percent, then the quantity demanded will decline by
45 percent
Total revenue is
Price x Quantity
Demand is elastic
Whenever the absolute value of the price elasticity of demand is greater than 1, but less than infinite
Demand is said to be inelastic when
a given percentage change in price will result in a less than proportionate percentage change in the quantity demanded
A perfectly inelastic demand curve is
a vertical straight line
When demand is elastic
changes in price and changes in total revenue move in opposite directions
If the price of one good increases, and as a result the demand for another related good falls, the goods are
complements
If the price elasticity of demand for a product is less than 1, then
consumers are relatively insensitive to price change
Moving downward on a downward‐sloping linear demand curve, the absolute value of the price elasticity of demand
decreases continuously
If a good has an absolute price elasticity of 2, the demand for the good is
elastic
No matter what the price of coffee is in the cafeteria, Jack spends $20 a week on coffee. We can conclude that the absolute value of the price elasticity of demand for coffee for Jack is
equal to 1
Vincent Van Gogh paintings
have a price elasticity of supply close to 0.0
A perfectly elastic demand curve is
horizontal
The price elasticity of demand measures
how responsive consumers are to a change in price
The cross-price elasticity of demand of products ʺMʺ and ʺNʺ is zero. This implies that ʺMʺ and ʺNʺ are
independent products
If your income rises by 25 percent and, as a result, you buy fewer packages of Ramen Noodles, then Ramen Noodles are a(n)
inferior good
A movie theater raises ticket prices from $8 to $10 in order to raise revenues. The theaterʹs management is assuming the absolute value of the price elasticity of demand for tickets is
less than 1
If your income rises by 15 percent and, as a result, you buy more steak, then steak is a(n)
normal good
Price elasticity of demand is the responsiveness
of the quantity demanded to a change in price
A perfectly inelastic supply curve is
parallel to the price axis
A perfectly elastic supply curve is
parallel to the quantity axis
If a good has an absolute price elasticity of 0, the demand for the good is
perfectly inelastic
The price change of a good elicited no change in quantity demanded means the items is
perfectly inelastic
For most goods and services the income elasticity of demand is
positive
The price elasticity of supply is higher when
producers have more time to adjust to price changes
Another term for elasticity is
responsiveness
If demand is elastic and the price of a product decreases by 10 percent, then
the change in quantity demanded is greater than 10 percent
The cross price elasticity of demand is defined as
the percentage change in the demand for one good (a shift in the demand curve) divided by the percentage change in price of a related good
Along a downward-sloping straight-line demand curve, as the price of the product goes up
the price elasticity of demand goes from being inelastic to being elastic
When demand is unit elastic, a 10 percent change in the price of the good
will cause a change in quantity demanded equal to 10 percent
The slope of the perfectly elastic demand curve is
zero
A perfectly inelastic demand curve exhibit
zero responsiveness to changes in price