elasticity & GDP

Refer to 5-6. Sellers' total revenue would increase if the price

all of the above are correct

Using the midpoint method, at a price of $8, what is the income elasticity of demand when income rises from $7,500 to $10,000?

1.00

If a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is

1.33

Holding all other forces constant, if increasing the price of a good leads to an increase in total revenue, then the demand for the good must be

inelastic

As price falls from Pa to Pb, which demand curve represents the most elastic demand?

D1

An increase in nominal US GDP necessarily implies that the United States is producing a larger output of goods and services.

False

If consumption if $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment if $1200, then exports are $300

False

If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP

False

Normal goods have negative income elasticities of demand, while inferior goods have positive income elasticities of demand

False

Price elasticity of demand along a linear, downward-sloping demand curve increases as price falls.

False

GDP adds together many differently kinds of products into a single measure of the value of economic activity by using market prices

True

GDP is the most closely watched economic statistics because it is thought to be the best single measure of a society's economic well-being

True

Necessities tend to have price inelastic demands, whereas luxuries have price elastic demands.

True

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

True

In a simple circular-flow diagram a. households spend all of their income b. all goods and services are bought by households c. expenditures flow through markets for goods.... d. all of the above

all of the above

Transfer payments a. are payments that flow government to house b. are not made to exchange for current goods or services c. alter household income, but do not reflect the economy's.. d. all of the above

all of the above

When demand is elastic, a decrease in price will cause

an increase in total revenue

GDP per person tells us the income and expenditure of the

average person in the economy

(#18 Graph) Refer to figure 5-13. Along which of these segments of the supply curve is supply least elastic

between G and H

If the cross-price elasticity of two goods is negative, then those two goods are

complements

We would expect a macroeconomist, as opposed to a microeconomist, to be particularly interested in

devising policies to promote low inflation

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

elastic

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the

flatter the demand curve will be

Which of the following statistics is usually regarded as the best single measure of a society's economic well-being?

gross domestic product

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

one year after the price increase

Which of the following is included in the consumption component of U.S. GDP?

purchases of natural gas by U.S. households

When consumers face riding gas prices they typically

reduce their quantity demanded more in the long run than in the short run

Which of the three supply curves represents the most elastic supply?

supply curve B

define "gross domestic product (GDP)"

the market value of all final goods and serves produced in a country during a period of time

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

the purchase of a new house

If the cross-price elasticity of demand is 1.25, then the two goods would be

the two goods are substitutes

When demand is perfectly inelastic, the demand curve will be

vertical