Learning curve 5

positive

The cross-price elasticity is _____ for substitutes.

less

When the sign of the cross-price elasticity of demand is negative, it means that you buy _____ of a good when the price of another good goes up.

more

When the sign of the cross-price elasticity of demand is positive, it means that you buy _____ of a good when the price of another good goes up.

zero; unchanged

When the supply curve is completely vertical, it means that the price elasticity of supply is _____. No matter what the change is in price, the total quantity supplied is _____.

perfectly competitive; elasticity of demand

When you are NOT in a(n) _____market, then you need to know the _____for your specific product.

flatter; more

Whenever two demand curves pass through the same point, the _____ demand curve is the _____ elastic demand curve.

perfectly elastic

When the demand curve is completely horizontal it means that the price elasticity of demand is infinite. Economists call this _____ demand.

1.50

When the government increased the minimum wage by 50%, it led to a 75% increase in workers providing labor. Based on the information given, what is the price elasticity of supply for labor?

quantity demanded; price

The price elasticity of demand measures by what percent the _____ will change following a 1% _____ increase.

positive

The income elasticity of demand is _____ for normal goods.

how responsive your demand for a good is to changes in your income.

The income elasticity of demand measures:

competing products; close substitute

The more _____ there are, the more likely you are to find a _____.

demand; price changes

The price elasticity of _____ measures how responsive buyers are to _____.

1%

The price elasticity of demand measures by what percent the quantity demanded will change following a _____ price increase.

price times quantity.

Total revenue is defined as the total amount you receive from buyers, which is calculated as:

0.2

If cutting the price of frozen pizza by 30% leads to an increase in the quantity demanded by 6%, what is the absolute value of the price elasticity of demand for frozen pizza?

demanded will rise

The cross-price elasticity of demand measures by what percent the quantity _____ following a 1% increase in the price of another good.

substitutes

The cross-price elasticity is positive for goods that are _____.

elastic

Easily available variable inputs make supply _____.

the quantity is more responsive to price changes.

A bigger absolute value of the price elasticity of supply means that:

more price sensitive; there are close substitutes to something you want

A supercenter provides more variety of goods than a small store does. You will find that you are _____ when shopping in a supercenter because _____.

changes in quantity in the same direction along a supply curve.

When the price elasticity of supply is a positive number, changes in price lead to:

flexibility; prices

Extra capacity gives businesses the _____ to respond to higher_____.

They make supply more elastic.

How do inventories affect supply?

Percent change in quantity demanded ÷ Percent change in income.

Income elasticity of demand equals:

price elasticity of demand; a change in price

As a manager, you will want to use the _____ for your product to forecast the likely consequences of _____.

forecast the likely consequences of any change in price.

As a manager, you will want to use the price elasticity of demand for your product to:

Percent change in quantity demanded ÷ Percent change in price of another good.

Cross-price elasticity of demand equals:

quantity; price

Demand is elastic when the percent change in _____ is larger than the percent change in _____, which means that the price elasticity is greater than one.

smaller; less than one

Demand is inelastic when the percent change in quantity is _____ than the percent change in price, which means that the price elasticity is _____.

percent change; point midway

Economists use a special method called the midpoint formula which measures the _____ between any two points relative to the _____ between those two points.

more; less

Higher prices lead to _____ total revenue if demand is inelastic, and lead to _____ total revenue if demand is elastic.

0.25

If cutting the price of automobiles by 20% leads to an increase in the quantity demanded by 5%, what is the absolute value of the price elasticity of demand for automobiles?

0.5

If increasing the price of solar panels by 20% leads to a decrease in the quantity demanded by 10%, what is the absolute value of the price elasticity of demand for solar panels?

increase; an increase

If the percent rise in price is larger than the percent decline in quantity, then a price _____ will lead to _____ in your total revenue.

the demand for your product is inelastic.

If the percent rise in price is larger than the percent decline in quantity, then:

increase; a decline

If the percent rise in price is smaller than the percent decline in quantity, then a price _____ will lead to _____ in your total revenue.

the demand for your product is elastic.

If the percent rise in price is smaller than the percent decline in quantity, then:

= ((P2 − P1) ÷ (P2 + P1)/2) × 100

If the price changed from P1 to P2, using the midpoint formula, what is the percentage change in price?

Increase by 5%

If the price of eggs were to fall by 25%, and if the price elasticity of demand for eggs is around −0.2, will the quantity demanded for eggs increase or decrease, and by what percent?

Decrease by 3%

If the price of eggs were to rise by 15%, and if the price elasticity of demand for eggs is around −0.2, will the quantity demanded for eggs increase or decrease, and by what percent?

imperfectly competitive; can decide what price to charge

If your business is operating in a(n) _____market, you _____.

perfectly competitive markets

In _____, if you raise your price by even a small amount, the quantity demanded of your products goes to zero.

goes to zero

In perfectly competitive markets, if you raise your price by even a small amount, the quantity demanded of your products _____.

Percent change in quantity demanded ÷ Percent change in price.

Price elasticity of demand =:

Percent change in the quantity supplied ÷ Percent change in the price.

Price elasticity of supply equals:

relatively responsive

Quantity is _____ when supply is somewhat elastic.

fairly unresponsive

Quantity supplied is _____ to price changes when supply is inelastic.

inelastic; smaller

Supply is _____ whenever the percent change in quantity supplied is _____ than the percent change in price.

price elasticity of supply

The _____ measures how responsive sellers are to price changes.

cross-price elasticity of demand

The _____ measures how responsive the demand for one good is to price changes of another.

income elasticity of demand

The _____ measures how responsive your demand for a good is to changes in your income.

substitutes; demand

The availability of _____ determines the price elasticity of _____.

complements

The cross-price elasticity is negative for goods that are _____.

how responsive buyers are to price changes.

The price elasticity of demand measures:

quite small; much larger

The price elasticity of supply may be _____ in the short run, but it is typically _____ over the long run.

the quantity supplied; price rise

The price elasticity of supply measures by what percent _____ will increase following a 1% _____.

how responsive sellers are to price changes.

The price elasticity of supply measures:

the ratio of the percent change in quantity demanded and the percent change in the price.

We measure the price elasticity of demand by observing how the quantity demanded responds to a price change. That responsiveness is measured by:

1.25

When Uber increased prices by 80% for a certain place and specific time it led to a 100% increase in Uber drivers supplying rides. Using the percent change in the price and the percent change in the quantity supplied, what is the price elasticity of supply for Uber rides?

inelastic

When buyers are not very responsive to price changes, economists describe their demand as _____.

inelastic

When suppliers can't increase the quantity supplied by much in response to higher prices, economists describe their supply as _____.

larger; inelastic

When the percent change in price is _____ than the percent change in quantity demanded, demand is _____.

elastic

When the price elasticity of demand or supply is _____, it means that the quantity demanded or supplied will be really responsive to changes in price.

Rice and pasta

Which of the following has the lowest value of the price elasticity of demand?

Necessities have more elastic demand.

Which of the following is NOT a correct demand elasticity factor?

the percent change in quantity supplied to the percent change in price.

You can measure the price elasticity of supply as the ratio of:

Total revenue

_____ is the total amount you receive from buyers, which is calculated as price times quantity.

The price elasticity of demand

_____ measures by what percent the quantity demanded will change following a 1% price increase.

Perfectly elastic supply

_____ occurs when the percent change in quantity supplied is infinite for any change in price.

Perfectly inelastic supply

_____ occurs when the percent change in quantity supplied is zero for any change in price.