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