Chapter 6 - Quiz 7

horizontal

How is a perfectly elastic supply curve shaped?

vertical

How is a perfectly inelastic demand curve shaped?

1.62

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? Use the midpoint formula.

elastic

If at a price of $24, Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids, the demand for her orchids is

substitutes

If the cross-price elasticity of demand between beer and wine is 0.31, then beer and wine are

Remains Constant

If the demand for a life-saving drug was perfectly inelastic and the doubled, the quantity demanded would

the percentage change in quantity demanded is less than the percentage change in price (in absolute value)

If the demand for cell phone service is inelastic, then

It falls

If the price elasticity of demand for canned soup is estimated at -1.62. What happens to sales revenue if the price of canned soup rises?

buyers of steel are more sensitive to a price change if they have more time to adjust to the price change

If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because

change in buyers' incomes

Income elasticity measures how a good's quantity demanded responds to

the demand for salt is relatively inelastic

Most people buy salt infrequently and in small quantities. Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded. Therefore

the resulting increase in price is proportionately greater than decrease in quantity sold

Suppose a decrease in the supply of wheat results in an increase in revenue. This indicates that

The demand for tomatoes is price inelastic

Suppose a frost destroys the tomato crop in California but farmers see an increase in their revenues. Which of the following best explains this?

The more elastic the supply curve, the smaller the price increase.

Suppose the demand curve for a product is represented by a typical downward-sloping curve. Now suppose the demand for this product increases. Which of the following statements accurately predicts the resulting increase in price?

a vacation home in the Swiss Alps

Which of the following items is likely to have the highest income elasticity of demand?

cholesterol medication in general

Which of the following products comes closest to having a perfectly inelastic demand?

If the price of a good is raised and total revenue increases, demand is inelastic

Which of the following statements is true?

A wide variety of substitutes are available for the good

Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

shampoo and conditioner; iPhones and earbuds

Which of the pairs listed will have a negative cross-price elasticity?

the price of a product multiplied by the number of units of the product sold

Total revenue is equal to

an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is a normal good

Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09. This means that

less elastic than

The demand for all carbonated beverages as a whole is likely t be ______________ the demand for Dr. Pepper

lies below the midpoint of the curve

The inelastic segment of the demand curve

positive

The price elasticity of an upward-sloping supply curve is always