eco

Suppose that when the price of good X increases from $800 to $850, the quantity demanded of good Y increases from 65 to 70. Using the midpoint method, the cross-price elasticity of demand is about

1.2, and X and Y are substitutes.

Normal goods have negative income elasticities of demand, while inferior goods have positive income elasticities of demand.

False

When demand is inelastic, a decrease in price increases total revenue

False

Which of the following statements about agriculture in the United States is correct?

Increasing the supply of agricultural products typically benefits consumers but harms farmers as a group

Refer to Figure 5-4 . Total revenue when the price is P1 is represented by

areas B + D.

Supply tends to be more elastic in the short run and more inelastic in the long run.

false

Refer to Figure 5-5 . If the price decreased from $36 to $12, total revenue would

increase by $4,800, and demand is elastic between points X and Z.

Demand is elastic if the price elasticity of demand is greater than 1.

true

Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices or income

true

Normal goods have positive income elasticities of demand, while inferior goods have negative income elasticities of demand.

true