Microeconomics chapter 4

Which of the following pairs of goods is most likely to have a positive cross-price-elasticity of demand?

Steak and hamburger. Fighter jets and pencils. Hamburgers and hamburger buns. College professors and textbooks.

Which is not characteristic of a product with relatively inelastic demand?

The good is regarded by consumers as a necessity. There are a large number of good substitutes for the good. Buyers spend a small percentage of their total income on the product. Consumers have had only a short time period to adjust to changes in price.

A positive income elasticity of demand coefficient indicates that:

a product is an inferior good. a product is a normal good. two products are substitute goods. two products are complementary goods.

Demand can be said to be inelastic when:

an increase in price results in a reduction in total revenue. a reduction in price results in an increase in total revenue. a reduction in price results in a decrease in total revenue. the elasticity coefficient exceeds one.

A straight-line downward-sloping demand curve has a price elasticity of demand that:

decreases as price decreases. increases as price decreases. is zero at all prices. is unitary at all prices.

When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. In this range of prices, demand for this product is:

elastic. inelastic. cross-elastic. unitary elastic.

An increase in the price of a good will cause total revenue to fall if price elasticity of demand is:

elastic. inelastic. unitary elastic. perfectly elastic.

Along a linear downward-sloping demand curve, the price elasticity of demand will be:

greater than one across each price range. less than one across each price range. equal to zero across each price range. different across each price range.

If a product has a short-run elasticity of supply equal to zero, then an increase in the demand for the product will:

have no effect on price or quantity sold. increase price and leave quantity sold unchanged. increase price and reduce the quantity sold to zero. leave the price unchanged and reduce the quantity sold.

For complementary goods, the coefficient of cross-price-elasticity of demand is:

negative. positive. greater than one. near zero.

If the price elasticity of demand for a good is .75, the demand for the good can be described as:

normal. elastic. inferior. inelastic.

An inferior good is best defined as a product for which the:

price elasticity of demand is negative. income elasticity of demand is negative. price elasticity of demand is zero. income elasticity of demand is zero.

If an increase in the supply of a product results in a decrease in the price, but no change in the actual quantity of the product exchanged, then the:

price elasticity of supply is zero. price elasticity of supply is infinite. price elasticity of demand is unitary. price elasticity of demand is zero.

The price elasticity of demand is a measure of the:

steepness or slope of a demand curve. absolute changes in quantity demanded and price. responsiveness of quantity demanded to a change in price. sensitivity of the quantity demanded for one good to a change in the price of another good

A positive cross-price-elasticity of demand for two products indicates that they are:

substitutes. complements. independent goods. normal goods.

To economists, the main differences between "the short run" and "the long run" are that:

the law of diminishing returns applies in the long run, but not in the short run. in the short run all resources are fixed, while in the long run all resources are variable. in the long run all resources are variable, while in the short run at least one resource is fixed. fixed costs are less important to decision making in the long run than they are in the short run.

Elasticity of supply will increase when:

the number of producers selling a product decreases. producers are given less time to respond to price changes. the number of consumers wanting to purchase a product increases. it becomes easier to substitute one factor of production for another in a manufacturing process

When the demand for a good is price-elastic at a given output level:

total revenue is negative. total revenue for the good will increase if its price decreases. an increase in price will lead to an increase in total revenue for firms selling the good. a large change in price will result in a relatively small change in the quantity demanded.

A 4 percent reduction in the price of a product causes consumer expenditure to remain the same. The price elasticity of demand is:

zero. greater than zero. greater than zero but less than 1. equal to 1.