ECON Chapter 5
If sellers do not respond at all to a change in price, technological advancement must be great
False
A good will have a more inelastic demand the greater the availability of close substitutes
False
For a horizontal demand curve, slope is undefined and elasticity equals 0
False
If a 15 % increase in price causes a 30% decrease in quantity demanded, this product might have no close substitute
False
When quantity demanded responds only slightly to changes in price, demand is said to be unit elastic
False
A decrease in supply will cause the largest increase in price when both supply and demand are inelastic
True
Alice says that she would buy one banana split a day regardless of the price. If she is telling the truth, Alice's demand for banana splits is perfectly inelastic
True
As the elasticity of supply approaches infinity, very small changes in price will lead to very large changes in quantity supplied
True
Concerning a vertical supply curve, suppliers will not respond to a change in price
True
Goods with close substitutes tend to have more elastic demands than do goods without close substitutes
True
If two supply curves pass through the same point and one is steep and the other is flat, the steeper supply curve is more inelastic
True
The demand for Rice Krispies is more elastic than the demand for cereal
True
The price elasticity of demand measures a buyer's responsiveness to a change in the price of a good
True
The price of calculators increases by 15% and the quantity demanded per week falls by 45%. the price elasticity is 3.
True
Chocolate Chip Cookie Dough ice cream would tend to have very elastic demand because it must be eaten quickly
False
Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount
False
Demand is elastic if elasticity is less than 1
False
Demand is inelastic if the elasticity is greater than 1
False
Demand is said to be elastic if the price of the good responds substantially to changes in demand
False
Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the demand curve will be steeper
False
If a 30% change in price causes a 15% change in quantity supplied, then the price elasticity of supply is 1/2 and supply is elastic
False
If the elasticity of supply is zero, then supply is very elastic
False
If the elasticity of supply of a product is 2.5 we know that supply is inelastic
False
If the price elasticity of demand for a good is 4.0, then a 10% increase in price would result in a 4.0% decrease in the quantity demanded
False
If the quantity supplied is the same regardless of price, then the supply curve would be elastic
False
If the quantity supplied responses only slightly to changes in price, then supply is said to be elastic
False
In general, elasticity is the friction that develops between buys and sellers in a market
False
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
False
Supply tends to be more elastic in the short run and more inelastic in the long run
False
The demand for gasoline will respond more to a change in price over a period of five weeks than a period of five years
False
The elasticity of a perfectly elastic supply curve equals 0
False
The flatter the demand curve that passes through a given point, the more inelastic the demand
False
The greater the price elasticity of demand the more likely the product is a necessity
False
The price elasticity of supply measures how much the quantity supplied responds to changes in input prices
False
When the price of knee braces increased by 25% the Brace Yourself Company increased their quantity supplied of knee braces per week by 75%. BYC's price elasticity of supply of knee braces is 0.33
False
Suppose the price elasticity of demand for basketballs is 1.20 A 15% increase in price will result in an 18% decrease in the quantity of basketballs demanded
True
The difference between slope and elasticity is that slope measures actual changes and elasticity measures percentage changes
True
The main determinant of the price elasticity of supply is time
True
The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price
True
When a supply curve is relatively flat, the supply is relatively elastic
True
Demand is unit elastic if elasticity is less than 1
False
If the price elasticity of demand is equal to 0, demand is unit elastic
Perfectly inelastic
As elasticity rises, the supply curve gets flatter
True
Demand for a good would tend to be more inelastic the fewer the available substitutes
True
Demand is inelastic if elasticity is less than 1
True
Demand is said to be unit elastic if quantity demanded changes by the same percent as the price
True
If a supply curve is horizontal it is said to be perfectly elastic and the price of elasticity of supply approaches infinity
True
If demand is perfectly inelastic, the demand curve is vertical and elasticity is equal to 0
True
Necessities tend to have price inelastic demands, whereas luxuries have price elastic demands
True
Price elasticity of supply measures how much the quantity supplied responds to changes in the price
True
