Econ chapter 6
With the increased usage of cell phone services, what has happened to the price elasticity of demand for land line phone services
It has become more price elastic
Which of the following would result in a higher absolute value of the price elasticity of demand for a product
a wide variety of substitutes are available for the good
Cross price elasticity of demand is calculated as the
percentage change in quantity demanded of one good divided by percentage change in price of a different good
The price elasticity of an upward-sloping supply curve is always
positive
Total revenue equals
price per unit * quantity sold
When demand is price elastic, a fall in price causes total revenue to rise because
the increase in quantity sold is large enough to offset the lower price
If the cross-price elasticity for goods X and Y are negative, this means the two goods are
complements
Income elasticity measures
how a good's quantity demanded responds to change in buyer's income
If a firm lowered the price of the product it sells and found that total revenue did not change, then the demand for its product is
unit-elastic
Suppose that the price of a money clip increases from 0.75 to .0.90 and quantity supplied rises from 8,000 units to 10,000 units. Use the midpoint formula to calculate the price elasticity of supply
1.22
Price elasticity of demand measures
How responsive quantity demanded is to a change in price
When there few close substitutes available for a good, demand tends to be
relatively inelastic