Economics test 2

The price of product X is reduced from $100 to $90 and, as a result , the quantity demanded increases from 50 to 60 units. Therefore, demand for X in this price range.

is elastic

Refer to the information and assume the stadium capacity is 5,000. The supply of seats for the game

is perfectly inelastic

If quantity demanded is completely unresponsive to price changes, demand is

perfectly inelastic.

Refer to the diagram and assume that price increases from $2 to $10. The coefficient of the price elasticity of supply (midpoint formula) relating to this price change is about

25, and supply is inelastic

In which of the following cases will total revenue increase?

Price rises and demand is inelastic.

The main determinant of elasticity of supply is the

amount of time the producer has to adjust inputs in response to a price change.

We would expect the cross elasticity of demand between Pepsi and Coke to be

positive, indicating substitute goods.

The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the immediate market period, the short run, and the long run. In the long run, the increase in demand will

increase both equilibrium price and quantity.

If a firm's demand for labor is elastic, a union-negotiated wage increase will

cause the firm's total payroll to decline.

Suppose that a 20 percent increase in the price of normal good Y causes a 10 percent decline in the quantity demanded of normal good X. The coefficient of cros elasticity of demand is

negative, and therefore these goods are complements.

Which of the following goods (with their respective income elasticity coefficients in parentheses) will most likely suffer a decline in demand during a recession?

plasma screen and LCD TVs (+4.2)

Studies show that the demand for gasoline is

price inelastic in both the short and long run.

Compared to coffee, we would expect the cross elasticity of demand for

tea to be positive, but negative for cream.

Refer to the diagram and assume a single good. If the price of the good increased from $5.70 to $6.30 along D1 , the price elasticity of demand along this portion of the demand curve would be

1.2

The price elasticity of demand for widgets is 0.80. Assuming no change in the demand curve for widgets, a 16 percent increase in sales implies a ...

20 percent reduction in price

The supply of product X is elastic if the price of X rises by

5 percent and quantity supplied rises by 7 percent.

Answer the question on the basis of the following demand schedule. Price Quantity Demanded 6 1 5 2 4 3 3 4 2 5 1 6 Which of the following is correct?

Although the slope of the demand curve is constant, price elasticity declines as we move from high to low price ranges.

The demand for a product is inelastic with respect to price if ...

Consumers are largely unresponsive to a per unit price change.

Which of the following is correct?

If the demand for a product is inelastic, a change in price will cause total revenue to change in the same direction.

If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will ...

Increase the amount demanded by more than 10 percent.

If the demand for product X is inelastic, a 4 percent decrease in the price of X will ...

Increase the quantity of X demanded by the less than 4 percent.

Which of the following generalizations is not correct?

The price elasticity of demand is greater for necessities than it is for luxuries.

(Consider This) Which of the following best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s?

The supply of higher education is highly price inelastic, and demand has increased substantially.

A supply curve that is a vertical straight line indicates that

a change in price will have no effect on the quantity supplied.

(Last Word) Suppose that a firm has "pricing power" and can segregate its market into two distinct groups based on differences in elasticities of demand. The firm might charge

a higher price to the group that has the less elastic demand.

When the percentage change in price is greater than the resulting percentage change in quantity demanded,

an increase in price will increase total revenue.

The price elasticity of demand for beef is about 0.60. Other things equal, this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to

decrease by approximately 12 percent

If the price of hand calculators falls from $10 to $9 and, as a result, the quantity demanded increases from 100 to 125, then

demand is price elastic.

Suppose the total-revenue curve is derived from a particular linear demand curve. That demand curve must be

elastic for price increases that reduce quantity demanded from 4 units to 3 units

If the University Chamber Music Society decides to raise ticket prices to provide more funds to finance concerts, the Society is assuming that the demand for tickets is

inelastic

The demand for a necessity whose cost is a small portion of one's total income is

relatively price inelastic

Refer to the diagram, which is a rectangular hyperbola, that is, a curve such that each rectangle drawn from any point on the curve will be of identical area. In comparing the price elasticity and the slope of this demand curve, we can conclude that the

slope of the curve varies, but its elasticity is constant

If the income elasticity of demand for store brand macaroni and cheese is −3.00, this means that

store brand macaroni and cheese is an inferior good.

We would expect

the demand for Coca-Cola to be more price elastic than the demand for soft drinks in general.

The elasticity of demand for a product is likely to be greater

the greater the amount of time over which buyers adjust to a price change

An increase in demand will increase equilibrium price to a greater extent

the less elastic the supply curve.

The Illinois Central Railroad once asked the Illinois Commerce Commission for permission to increase its commuter rates by 20 percent. The railroad argued that declining revenues made this rate increase essential. Opponents of the rate increase contended that the railroad's revenues would fall because of the rate hike. It can be concluded that

the railroad felt that the demand for passenger service was inelastic and opponents of the rate increase felt it was elastic.

It takes a considerable amount of time to increase the production of pork. This implies that

the short-run supply curve for pork is less elastic than the long-run supply curve for pork