Elasticity Assignment
income elasticity of demand is a measure of how responsive:
demand is to a change in consumer income.
the slope of a linear demand curve is the change in price...by the change in quantity demanded.
divided
if the price elasticity of demand (|Ed|) equals 1.25, the demand is:
elastic
when there are many substitutes for a good or service, demand tends to be relatively more...
elastic
relatively more...demand curves tend to be flatter than relatively...demand curves.
elastic, inelastic
...is a measure of how responsive one variable is to a change in another variable.
elasticity
the more broadly a market is defined, the relatively more...demand will be.
inelastic note: in broadly-defined markets, there are fewer reasonable substitutes. therefore, demand tends to be less elastic.
if |Ed| = 0.15, the demand is:
inelastic (when |Ed| < 1, the demand is inelastic)
when the product price falls from $90 to $80, the quantity demanded rises from 600 to 700 units. The...in this range is -0.10.
slope note: the percent change in price is the change in price divided by the average price.
when supply changes, if the demand is relatively inelastic, the demand curves will tend to be...than if the demand is relatively elastic.
steeper
if the price of good A increases and generates an increase in the quantity of good B demanded, then the two goods are...
substitutes
when two goods are..., cross-price elasticity of demand is positive.
substitutes
when consumers have more...to adjust, demand becomes relatively more elastic.
time
businesses are interested in the price elasticity of demand because:
it allows them to estimate the potential changes in the quantity demanded associated with changes in the prices of their products.
the lower range of a linear demand curve is relatively...elastic.
less
the...run is the time period in which all inputs of production can be changed.
long
...definition influences the # of substitutes.
market
if supply is relatively elastic, firms are relatively...responsive to an increase in price.
more
if the price of a good A increases and generates an increase in the quantity of good B demanded, then cross-price elasticity of demand is...
positive
with cross-price elasticity of demand:
positive value indicates substitutes, and negative value indicates complements.
with income elasticity of demand:
a positive value indicates normal goods.
when two goods are complements, if the price of good A increases, it generates a...in the demand for good B.
decrease
a cross-price elasticity of demand of 0.75 means that if the price of good A increases by 10%, the quantity demanded of good B will...by...%
increase, 7.50
suppose that the quantity of umbrellas demanded at a price of $8 is 2,500 units. The company's total revenue is $...
$20000
using absolute values, in the inelastic range of the demand curve:
% change in quantity demanded < % change in price
using absolute values, in the elastic range of the demand curve:
% change in quantity demanded > % change in price
which of the following statements is true?
- slope uses changes in price and quantity - the elasticity calculation uses percentage changes in price and quantity - a relationship exists between slope and elasticity, but they are not the same thing
the time periods associated with a set of supply curves include:
- the immediate period - the long run - the short run
when the product price falls from $40 to $30, the quantity demanded rises from 500 to 600 units. Using the midpoint formula, the price elasticity of demand in this range is:
-0.636
when the product price falls from $40 to $30, the quantity demanded rises from 500 to 600 units. Using the simple formula, the price elasticity of demand in this range is:
-0.80
price elasticity of supply is a positive number number because:
...of the law of supply. note: price and quantity are inversely related in demand.
which of the following statements is true?
a relationship exists between slope and elasticity, but they are not the same thing.
the more...a market is defined, the fewer reasonable substitutes will be available.
broadly
the more...a market is defined, the fewer reasonable substitutes will be available.
broadly note: consider the availability of substitutes in a broadly-defined market such as "food." now consider substitutes in a narrowly-defined market such as coca-cola.
if the price of good A increases and generates a decrease in the quantity of good B demanded, then the two goods are...
complements
when two goods are..., the cross-price elasticity of demand is negative.
complements
elastic, inelastic, unit-elastic
correct:elastic
the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good is the:
cross-price elasticity of demand
a cross-price elasticity of demand of 0.50 means that if the price of good A decreases by 1%, the quantity demanded of good B will...by...%
decrease, .50%
a price elasticity of demand of -1.25 means that if the price increases by 1%, the quantity demanded will...by...%
decrease, 1.25%
a cross-price elasticity of demand of 1.25 means that if the price decreases by 10%, the quantity demanded of good B will...by...%
decrease, 12.50%
if the price elasticity of demand equals -4.55, the demand is:
elastic
the effect of policies will change over time as supply becomes relatively more...
elastic
price...of demand is a measure of how responsive the quantity demanded is to a change in price.
elasticity
when comparing the elasticity of two different supply curves, the...one is relatively more elastic, all else held constant.
flattest
a...indicates little response to a price change, and a value greater than one indicates a larger response to a price change.
fractional value
the...the change in price, the less reliable the elasticity estimate is going to be.
higher
the...period is the time period in which producers cannot increase their use of economic resources to increase quantity supplied.
immediate
over time, the...period becomes the...run, and the...run becomes the...run.
immediate, short, short, long
when two goods are substitutes, if the price of good A increases, it generates a...in the demand for good B.
increase
if demand is inelastic, increasing prices will...total revenue.
increase note:when demand is inelastic, price changes and total revenue changes are positively related: they move in the same direction.
a price elasticity of demand of -1.25 means that if the price decreases by 10%, the quantity demanded will...by...%
increase, 12.5%
a price elasticity of supply of 1.25 means that if the price increases by 10%, the quantity supplied will...by...%
increase, 12.50%
if demand is..., increasing prices will increase total revenue.
inelastic
if |Ed| = 0.25, the demand is:
inelastic
when demand is inelastic, consumers are...responsive to changes in prices.
less
if the price of a good A increases and generates an decrease in the quantity of good B demanded, then cross-price elasticity of demand is...
negative
the...sign on...elasticity of demand indicates the inverse relationship that exists between the price and the quantity demanded.
negative, price
price elasticity of supply is a positive number because:
of the law of supply
cross-price elasticity of demand is a measure of the effect of a change in the:
price of one product on the quality demanded of another. note: the focus of cross-price elasticity of demand is on the effect of a change in the price.
cross-price elasticity of demand is a measure of the effect of a change in the:
price of one product on the quantity demanded of another.
price elasticity of demand is influenced by the...income spent on a good or service.
proportion of
with cross-price elasticity of demand:
the sign helps determine whether the goods or services are substitutes or complements.
...elasticity of supply is a measure of how responsive quantity supplied is to a change in price.
price
when the product price falls from $90 to $80, the quantity demanded rises from 600 to 700 units. The...in this range is -1.50.
price elasticity of demand
when the product price falls from $90 to $80, the quantity demanded rises from 600 to 700 units. The...in this range is -1.50.
price elasticity of demand note: slope is the change in price divided by the change in quantity demanded
because a direct relationship exists between price and quantity supplied:
price elasticity of supply is positive
the...range of a linear demand curve is relatively more elastic.
upper
temperature elasticity of demand would be useful if:
you owned an ice cream business.
