Chapter 6 Elasticity

Advertisers attempt to make the products they advertise more elastic in demand.

False

From the sellers perspective, it is most desirable for a product to be perfectly elastic in demand

False

If a good is perfectly inelastic in a given price range, it will be perfectly elastic at all prices.

False

A Ford Mustang would tend to be more elastic in demand than cars as a whole

True

A good is unit elastic in demand if as the price changes there is no resulting change in total revenue

True

As the price of a product rises the product will become more elastic in demand, assuming that the demand curve for the product is a downward-sloping straight line.

True

If the demand for cocaine is inelastic and people commit crimes to buy drugs, then a drug bust can increase the amount of drug related crime.

True

It is very important for the seller of a good to know whether the good is elastic, unit elastic, or inelastic in demand so that she will know what will happen to total revenue when she changes the price of the good.

True

The existence of substitutes for a good and the percentage of one's budget spent on the good are among the factors that determine how elastic the demand for the good will be

True

When a good is perfectly inelastic in demand, or perfectly elastic in supply, the buyers will pay the full tax that is placed on the sellers

True

When the price of a good rises, total revenue will fall if the good is elastic in demand

True

Price elasticity of demand is the ratio of the percentage change in price of a good to the percentage change in quantity demanded of that good

false

The cross elasticity of demand coefficient between coca-cola and pespi cola would be expected to be negative

false

Cross elasticity of demand measures consumer responsiveness to a change in the price of one good, in terms of the quantity demanded of some other good

true