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
