unit 5 multiple choice

If consumers always spend 15 percent of their income on food, then the income elasticity of demand for food is

1.00.

Which of the following would cause a demand curve for a good to be price inelastic?

The good is a necessity.

If the income elasticity of demand for a good is negative, it must be

an inferior good.

If the cross-price elasticity between two goods is negative, the two goods are likely to be

complements.

A decrease in supply (shift to the left) will increase total revenue in that market if

demand is price inelastic.

If consumers think that there are very few substitutes for a good, then

demand would tend to be price inelastic.

If demand is linear (a straight line), then price elasticity of demand is

elastic in the upper portion and inelastic in the lower portion.

If supply is price inelastic, the value of the price elasticity of supply must be

less than 1.

If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for that good is

price elastic.

If there is excess capacity in a production facility, it is likely that the firm's supply curve is

price elastic.

In general, a flatter demand curve is more likely to be

price elastic.

In general, a steeper supply curve is more likely to be

price inelastic.

Technological improvements in agriculture that shift the supply of agricultural commodities to the right tend to

reduce total revenue to farmers as a whole because the demand for food is inelastic.

The price elasticity of demand is defined as

the percentage change in the quantity demanded of a good divided by the percentage change in the price of that good.

If a supply curve for a good is price elastic, then

the quantity supplied is sensitive to changes in the price of that good.

The demand for which of the following is likely to be the most price inelastic?

transportation

If an increase in the price of a good has no impact on the total revenue in that market, demand must be

unit price elastic.

If a fisherman must sell all of his daily catch before it spoils for whatever price he is offered, once the fish are caught, the fisherman's price elasticity of supply for fresh fish is

zero