Chapter 6 Ec Quiz

The larger the share of a good in a consumer's budget, holding everything else constant, the 1. more price elastic is a consumer's demand. 2. more unit elastic is a consumer's demand. 3. more price inelastic is a consumer's demand. 4. more vertical is a consumer's demand curve.

1. more price elastic is a consumer's demand.

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a ton to $180 a ton and quantity sold decreased from 800 tons to 240 tons. What is the absolute value of the price elasticity of demand? 1. 0.11 2. 0.37 3. 2.69 4. 9.33

3. 2.69

If the cross-price elasticity of demand for computers and software is negative, this means the two goods are 1. complements. 2. normal. 3. inferior. 4. substitutes.

1. complements.

When there few close substitutes available for a good, demand tends to be 1. relatively inelastic. 2. relatively elastic. 3. perfectly elastic. 4. perfectly inelastic.

1. relatively inelastic.

Cross-price elasticity of demand is calculated as the 1. percentage change in quantity sold divided by percentage change in buyers' incomes. 2. percentage change in quantity supplied divided by percentage change in price of a good. 3. percentage change in quantity demanded of one good divided by percentage change in price of a different good. 4. percentage change in quantity demanded divided by percentage change in price of a good.

3. percentage change in quantity demanded of one good divided by percentage change in price of a different good.

When demand is unit elastic, a change in price causes total revenue to stay the same because 1. buyers are buying the same quantity. 2. the change in profit is offset by the change in production cost. 3. the percentage change in quantity demanded exactly offsets the percentage change in price. 4. total revenue never changes with price changes.

3. the percentage change in quantity demanded exactly offsets the percentage change in price.

If demand is perfectly inelastic, the absolute value of the price elasticity of demand is 1. less than one. 2. more than one. 3. zero. 4. equal to the absolute value of the slope of the demand curve.

3. zero.

Which of the following statements about the price elasticity of demand is correct? 1. The absolute value of the elasticity of demand ranges from zero to one. 2. Demand is more elastic the smaller the percentage of the consumer's budget the item takes up. 3. The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. 4. Demand is more elastic in the long run than it is in the short run.

4. Demand is more elastic in the long run than it is in the short run.

Income elasticity measures how a good's quantity demanded responds to 1. producers' incomes. 2. change in the price of another good. 3. change in the goods price. 4. change in buyers' incomes.

4. change in buyers' incomes.

If demand is inelastic, the absolute value of the price elasticity of demand is 1. greater than one. 2. one. 3. greater than the absolute value of the slope of the demand curve. 4. less than one.

4. less than one.

If the market for a product is broadly defined, then 1. there are many substitutes for the product and the demand for the product is relatively elastic. 2. the good has many complements. 3. the expenditure on the good is likely to make up a large share of one's budget. 4. there are few substitutes for the product and the demand for the product is relatively inelastic.

4. there are few substitutes for the product and the demand for the product is relatively inelastic.