MICRO CHAP 5
If the price of a product falls by 15% and the quantity supplied falls by 25%, the elasticity of supply is:
1.67
If the price elasticity of demand is 10, then for every 1% increase in price, there is a:
10% decrease in quantity demanded.
Suppose that the quantity demanded for a product falls by 9% as people's incomes fall by 3%. What is the income elasticity for this good?
3.00
If the income elasticity of demand for tea is 0.50, tea is a:
Normal good
Which of these would result in a higher price elasticity?
a longer time period
If the cross elasticity of demand for two goods is negative, that means that they are:
complementary goods
Tax burdens are higher on consumers when:
demand is inelastic and supply is elastic.
If a product's price rises by 6% and its quantity demanded falls by 8%, then we can say that demand for this product is:
elastic
Suppose the price elasticity of demand is 3.0 and the price elasticity of supply is 0.08. The burden of an excise tax:
falls primarily on producers.
Which of the following products would have the highest price elasticity of demand?
hot dogs sold by a street vendor
A firm increases its price for a good and total revenues increase. From this, we can conclude that its demand:
is price inelastic.
If hot dogs and relish are complements, their cross elasticity of demand is:
less than 0
In general, the flatter the supply curve is, the:
more elastic is supply.
If soda and potato chips are complements, then their cross elasticity of demand is:
negative
A vertical demand curve represents demand that is:
perfectly inelastic
Knowing a product's price elasticity of demand allows economists to:
predict the amount by which quantity demanded will change in response to a change in price.
Most income taxes are:
progressive
(Figure: Impact of Tax on Market Equilibrium) Based on the graph, implementing a tax:
raises equilibrium price from $6 to $10 and lowers equilibrium quantity from 120 units to 100 units.
A tax in which the percentage of income tax rises as income falls is known as a:
regressive tax
If the cross price elasticity of demand for good A with respect to good B is 2.3, then good A is a(n):
substitute for good B.