MICRO Flip Quiz Ch 5

For which of the following types of goods would the income elasticity of demand be positive and relatively large? a. luxuries b. goods for which there are many complements c. all normal goods d. all inferior goods

A

If the price of milk rises, when is the price elasticity of demand likely to be the lowest? a. immediately after the price increase b. three months after the price increase c. one year after the price increase d. one month after the price increase

A

When demand is elastic, a decrease in price will cause a. an increase in total revenue. b. no change in total revenue but a decrease in quantity demanded. c. a decrease in total revenue. d. no change in total revenue but an increase in quantity demanded.

A

A key determinant of the price elasticity of supply is the a. extent to which buyers alter their quantities demanded in response to changes in prices. b. length of the time period. c. number of close substitutes for the good in question. d. extent to which buyers alter their quantities demanded in response to changes in their incomes.

B

For a good that is a luxury, demand a. tends to be inelastic. b. cannot be represented by a demand curve in the usual way. c. tends to be elastic. d. has unit elasticity.

C

If the cross-price elasticity of two goods is positive, then the two goods are a. inferior goods. b. complements. c. substitutes. d. normal goods.

C

The price elasticity of supply measures how responsive a. sellers are to a change in buyers' income. b. equilibrium price is to a change in supply. c. sellers are to a change in price. d. buyers are to a change in production costs.

C

If the price elasticity of demand for a good is 10.0, then a 4 percent increase in price results in a a. 2.5 percent decrease in the quantity demanded. b. 4 percent decrease in the quantity demanded. c. 0.4 percent decrease in the quantity demanded. d. 40 percent decrease in the quantity demanded.

D

The price elasticity of demand measures a. the extent to which demand increases as additional buyers enter the market. b. how much more of a good consumers will demand when incomes rise. c. the movement along a supply curve when there is a change in demand. d. buyers' responsiveness to a change in the price of a good.

D

Using the midpoint method, between prices of $48 and $54, price elasticity of demand is about a. 3.89. b. 4.33. c. 0.92. d. 5.67.

D