ECON Ch. 5

The demand for which of the following is likely to be the most price inelastic?

transportation

Suppose that at a price of $30 per month, there are 30,000 subscribers to cable television in small town. If small town cable-vision raises its price to $40 per month, the number of subscribers will fall to 20,000. At which of the following prices does Small Town Cablevision earn the greatest total revenue?

$30 per month

Refer to table 5.3, using the midpoint method, the income elasticity of demand for good Y is

-2.33, and good y is an inferior good

If consumers always spend 15% of their income on food, then the income elasticity of demand for food is

1.00

Suppose that at a price of $30 per month, there are 30,000 subscribers to cable television in small town. If small town cable-vision raises its price to $40 per month, the number of subscribers will fall to 20,000. Using the midpoint method for calculating elasticity, what is the price elasticity of demand for cable television in small town?

1.4

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

False

In general, a flatter demand curve is more likely to be

Price elastic

Which of the following would cause a demand curve for a good to be price inelastic ?

The good is a necessity

The price elasticity of demand is defined as

The percentage change in the quantity demanded of a good divided by the percentage change in the price of that good

If the income elasticity of demand for a good is negative, it must be

an inferior good

The price elasticity of demand measures

buyers' responsiveness to a change in the price of a good.

If the cross price elasticity between 2 goods is negative, the 2 goods are likely to be

complements

A decrease in supply (shift to the left) will increase total revenue in that market if

demand is price inelastic

If consumers think there are very few substitutes for a good, then

demand would tend to be price inelastic

If demand is linear (a straight line), then price elasticity of demand is

elastic in the upper portion and inelastic in the lower portion

If the demand for donuts is elastic, then a decrease in the price of donuts will

increase total revenue of donut sellers.

If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for that good is

price elastic

Technological improvements in agriculture that shift the supply of agricultural commodities to the right tend to

reduce total revenue to farmers as a whole because the demand for food is inelastic

Suppose demand is perfectly elastic, and the supply of the good in question decreases. As a result,

the equilibrium quantity decreases, and the equilibrium price is unchanged.

If an increase in the price of a good has no impact on the total revenue in that market, demand must be

unit price elastic