Microeconomics, McGraw Hill, Assignment 4

If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will

increase the amount demanded by more than 10 percent.

The supply curve of antique reproductions is

relatively elastic.

Suppose that as the price of Y falls from $2.00 to $1.90, the quantity of Y demanded increases from 110 to 118. Then the absolute value of the price elasticity (using the midpoint formula) is

1.37.

In which of the following instances will total revenue decline?

Price rises and demand is elastic.

The main determinant of elasticity of supply is the

amount of time the producer has to adjust inputs in response to a price change.

Answer the question on the basis of the following demand schedule. The price elasticity of demand is unity

in the $4-$3 price range only.

The basic formula for the price elasticity of demand coefficient is

percentage change in quantity demanded/percentage change in price.

A demand curve that is parallel to the horizontal axis is

perfectly elastic.

A firm can sell as much as it wants at a constant price. Demand is thus

perfectly elastic.

If quantity demanded is completely unresponsive to price changes, demand is

perfectly inelastic.

Which of the following generalizations is not correct?

The price elasticity of demand is greater for necessities than it is for luxuries.

Which of the following is not characteristic of the demand for a commodity that is elastic?

Total revenue increases if price is increased.

When the percentage change in price is greater than the resulting percentage change in quantity demanded,

an increase in price will increase total revenue.

The price elasticity of demand coefficient measures

buyer responsiveness to price changes.

A perfectly inelastic demand schedule

can be represented by a line parallel to the vertical axis.

For a linear demand curve,

demand is elastic at relatively high prices.

If the price of hand calculators falls from $10 to $9 and, as a result, the quantity demanded increases from 100 to 125, then

demand is price elastic.

If the supply of product X is perfectly elastic, an increase in the demand for it will increase

equilibrium quantity, but equilibrium price will be unchanged.

If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will

increase the quantity demanded by about 25 percent.

The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. Therefore, demand for X in this price range

is elastic.

Assume that a 3 percent increase in income across the economy produces a 1 percent decline in the quantity demanded of good X. The coefficient of income elasticity of demand for good X is

negative, and therefore X is an inferior good.

Suppose that a 20 percent increase in the price of normal good Y causes a 10 percent decline in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is

negative, and therefore these goods are complements.

A manufacturer of frozen pizzas found that total revenue decreased when price was lowered from $5 to $4. It was also found that total revenue decreased when price was raised from $5 to $6. Thus,

the demand for pizza is elastic above $5 and inelastic below $5.

If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8, then

the price elasticity of demand is 2.25.