Graded Quiz 5

the same as

The price elasticity of demand for milk when quantity is measured in gallons will be _____ the price elasticity when quantity is measured in quarts.

revenue.

The price elasticity of demand helps determine the effect of price changes on a firm's:

an elastic demand.

A good that takes up a very large percentage of a consumer's budget will tend to have:

demand is inelastic

A government-imposed price floor above the market price of milk would increase consumers' expenditures on milk only if _____.

demand is inelastic.

A university administration's decision to raise tuition in order to increase revenue will be successful if:

one that consumers buy less of as their income rises.

An inferior good is:

demand for inferior goods will fall and the demand for normal goods will rise.

As the economy recovers from a recession, we should expect that the:

true

Both the income elasticity of demand and the cross-price elasticity of demand coefficients can take on negative, zero, or positive values.

both income and price inelastic.

Demand for a necessity, such as food, is:

independent of the units of measurement for price and quantity

Elasticity is always _____.

1

Figure 5.10 shows two upward-sloping linear supply curves that pass through the origin. The price elasticity of supply between $20 and $40 on the supply curve S' is _____.

increases; elastic

Figure 5.3 shows a linear demand curve. As you move from point A to point B along the demand curve (upper end of the demand curve), total revenue _____ and the demand is _____.

inelastic.

Figure 5.3 shows a linear demand curve. Between points C and D (lower end of the demand curve), the demand is:

Macaroni and cheese.

For which of the following goods is the value of income elasticity most likely to be negative?

the goods are complements.

If an increase in the price of peanut butter causes a decline in the demand for jelly, then:

inelastic

If city officials expect that an increase in bus fares will raise mass transit revenues, they must think that the demand for bus travel is _____.

false

If demand is elastic, a decrease in price leads to a decrease in total revenue.

true

If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded.

horizontal.

If supply is perfectly elastic, the supply curve is:

income elastic.

Luxury goods are:

true

Substitutes are pairs of goods that have a positive cross-price elasticity of demand.

total revenue will not change.

Suppose the price elasticity of demand for your economics textbook is −1. If the publisher raises the price by 5 percent:

two products are substitutes or complements.

The cross-price elasticity of demand is used to determine whether:

the cross-price elasticity of demand between film and cameras.

The percentage change in the demand for film divided by the percentage change in the price of cameras indicates:

A good with many substitutes.

Which of the following goods will have a higher price elasticity of demand?