Chapter 19 Elasticity

A. Income elasticity is negative for inferior goods where the quantity demanded falls as income rises. B. Income elasticity is positive for normal goods where the quantity demanded falls as income falls. C. Income elasticity is positive for normal goods where the quantity demanded rises as income rises. D. Income elasticity is negative for inferior goods where the quantity demanded rises as income falls. E. All of the above.

All of the above.

Suppose that over one range of​ prices, the absolute value of the price elasticity of demand varies from 15.0 to​ 2.5, and over another range of​ prices, the absolute value of the price elasticity of demand varies from 1.5 to 0.75. What can you say about total revenue and the total revenue curve over these two ranges of the demand curve as price​ falls? A. In the first case total revenue falls and in the second case total revenue falls. B. In the first case total revenue rises and in the second case total revenue rises. C. In the first case total revenue falls and in the second case total revenue falls and then rises. .D. In the first case total revenue rises and in the second case total revenue rises and then falls. .E. There is insufficient information to determine the effect on total revenue.

In the first case total revenue falls and in the second case total revenue falls and then rises.

Which of the following statements is​ true? A. The closer the substitutes for a particular commodity and the more substitutes there​ are, the more inelastic will be its price elasticity of demand. B. The larger the share of a​ person's total budget that is spent on a​ commodity, the greater that​ person's price elasticity of demand is for that commodity. C. Elasticity of demand is greater in the short run than in the long run. D. The demand for necessities is likely to be​ elastic, while the demand for luxuries is likely to be inelastic. E. All of the above.

The larger the share of a​ person's total budget that is spent on a​ commodity, the greater that​ person's price elasticity of demand is for that commodity.

Which of the following statements is​ true? A. The longer any price change​ persists, the greater the elasticity of demand. B. The closer the substitutes for a particular commodity and the more substitutes there​ are, the more inelastic will be its price elasticity of demand. C. The smaller the share of a​ person's total budget that is spent on a​ commodity, the greater that​ person's price elasticity of demand is for that commodity. D. The demand for necessities is likely to be​ elastic, while the demand for luxuries is likely to be inelastic.

The longer any price change​ persists, the greater the elasticity of demand.

What does the price elasticity of demand​ measure? A. The change in quantity demanded when there is a​ 1% change in income. B. The amount that the demand curve shifts when there is a change in the price of the good. C. How long it takes consumers to react when there is a change in the price of a good. D. The responsiveness of quantity demanded to a change in the price of a good.

The responsiveness of quantity demanded to a change in the price of a good.

The value of cross price elasticity of demand between goods X and Y is 2.00​, while the cross price elasticity of demand between goods X and Z is negative 2.00. Which of the following are​ true? A. X and Y are complements and X and Z are substitutes. B. X and Y and X and Z are substitutes. C. X and Y are substitutes and X and Z are complements. D. X and Y and X and Z are complements. E. None of the above.

X and Y are substitutes and X and Z are complements.

All of the following determine the price elasticity of demand except A. the existence of close substitutes. B. a change in the price of resources used to produce the good. C. the proportion of a​ person's budget spent on the good. D. the length of the time period.

a change in the price of resources used to produce the good.

. Corn grown and harvested by a small farmer in Iowa b. Heroin for a drug addict . c. Water for a desert hiker d. One of several optional textbooks in a​ pass-fail course

a. near perfectly elastic demand b. near perfectly inelastic demand c. near perfectly inelastic demand d. near perfectly elastic demand

A. on the​ downward-sloping portion of the demand curve. B. in the inelastic range of the demand curve. C. in the elastic range of the demand curve. .D. at the point of​ unit-elasticity on the demand curve.

at the point of​ unit-elasticity on the demand curve.

The price elasticity of demand for a particular commodity depends upon all of the following except A. availability of complementary goods. B. the percentage of a​ consumer's total budget devoted to purchasing that commodity. C. the number of close substitutes for that commodity. D. the length of time allowed for price changes of that commodity.

availability of complementary goods.

The absolute value of the​ short-run elasticity of demand for bread has been estimated to be 0.15. Its​ long-run elasticity of demand is A. 0.15. B. uncertain without more information. C. more than 0.15. D. less than 0.15.

more than 0.15.

The​ long-run elasticity of supply in most industries is​ ___________ than the​ short-run elasticity because in the long​ run, ​ ________________. A. less​ elastic; resources and firms can enter the industry B. less​ elastic; consumer demand will​ increase, increasing industry profits C. more​ elastic; consumer demand will​ increase, increasing industry profits D. more​ elastic; resources and firms can enter the industry

more​ elastic; resources and firms can enter the industry

Suppose that Norma is disappointed in the revenue her custom dress shop is bringing in. She is thinking of raising the price of each​ dress, but she asks you for advice. You decide she should A. raise the price if demand is elastic. B. lower the price if the income elasticity of demand is positive. C. lower the price if the income elasticity of demand is negative. D. raise the price if demand is inelastic.

raise the price if demand is inelastic.

Current increases in the price of gasoline are expected to persist indefinitely. Based only on this​ information, the long minus run demand for gasoline would be expected to be A. relatively inelastic comma as compared to the short minus run demand. B. relatively elastic comma as compared to the short minus run demand. C. unitary. D. There is not enough information to determine anything about elasticity.

relatively elastic comma as compared to the short minus run demand.

Price elasticity of demand is defined as A. the change in quantity demanded divided by the change in price. B. the percentage change in quantity demanded divided by the percentage change in price. C. quantity demanded divided by price. D. quantity demanded divided by the change in price.

the percentage change in quantity demanded divided by the percentage change in price.

Total revenue will decrease when A. the price elasticity of demand equals 1.20 and price rises. B. price and quantity change in opposite directions. C. the price elasticity of demand is negative. D. the price elasticity of demand equals 1.00 and price falls.

the price elasticity of demand equals 1.20 and price rises.

Which of the following would have the most elastic​ demand? A. ​Coca-Cola. B. Salt. C. Electricity. D. Cigarettes.

​Coca-Cola.