ECON CH. 5 T/F
F
Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.
F
Demand is inelastic if the elasticity is greater than 1.
T
Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.
T
If a supply curve is horizontal it is said to be perfectly elastic and the price elasticity of supply approaches infinity.
T
If demand is perfectly inelastic, the demand curve is vertical, and elasticity is equal to 0. `
F
If the price elasticity of demand is equal to 0, demand is unit elasticity.
T
Necessities tend to have price inelastic demands, whereas luxuries have price elastic demands.
T
Price elasticity of supply measures how much the quantity supplied responds to changes in the price.
F
Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price, and elastic if the quantity supplied responds only slightly to price.
F
Supply tends to be more elastic in the short run and more inelastic in the long run.
T
The demand for Rice Krispies is more elastic than the demand for cereal.
F
The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.
F
The flatter the demand curve that passes through a given point, the more inelastic the demand.
T
The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.
T
The price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent. The price elasticity of demand is 3.
F
When the price of knee braces increased by 25 percent, the Brace Yourself Company increased their quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply of knee braces is 0.33.