Principles of Microeconomics ECO/365T

If Es = 1.25, the supply is: elastic. unit-elastic. inelastic.

elastic.

The formula for price elasticity of demand is:

% change in quantity demanded/% change in price.

Suppose that the quantity of umbrellas demanded at a price of $5 is 2000 units. The company's total revenue is $______________.

Blank 1: 10,000 or 10000

The price elasticity of demand is often turned into a positive number to: correct for the calculation error. identify whether the demand is elastic inelastic or unit-elastic. see the relative size. see how it compares to other elasticities.

identify whether the demand is elastic inelastic or unit-elastic.

The price elasticity of demand is a negative number because

of the law of demand.

Price elasticity of supply is _____________ a number because of the law of supply.

positive

______________ elasticity of demand is a measure of how responsive the quantity demanded is to a change in price.

price

Using absolute values in the elastic range of the demand curve,: % change in quantity demanded > % change in price. % change in quantity demanded < % change in price. % change in quantity demanded = % change in price.

% change in quantity demanded > % change in price.

The formula for price elasticity of supply is: % change in price/% change in quantity supplied. % change in quantity supplied/% change in price. change in price/change in quantity supplied. change in quantity supplied/change in price.

% change in quantity supplied/% change in price.

A price elasticity of supply of 0.75 means that if the price increases by 10%, the quantity supplied will ____________ by ________________%

Blank 1: increase or rise Blank 2: 7.5, 7.50, or 7.5%

A price elasticity of supply of 0.75 means that if the price increases by 10%, the quantity supplied will ____________ by _________________%.

Blank 1: increase or rise Blank 2: 7.5, 7.50, or 7.5%

A price elasticity of demand of -1.25 means that if price decreases by 10% the quantity demanded will __________________ by _________________%.

Blank 1: increase, rise, or increases Blank 2: 12.5 or 12.50

If Es = 0.25, the supply is:

inelastic

The slope of a linear demand curve: a) always equals 1. b) is constant along the curve. c) is upward-sloping. d) is variable along the curve.

is constant along the curve.

Along the elastic range of the demand curve,: the percentage change in quantity demanded is greater than the percentage change in price. the percentage change in quantity demanded is less than the percentage change in price. the percentage change in quantity demanded equals the percentage change in price

the percentage change in quantity demanded is greater than the percentage change in price.

Price elasticity of supply is a measure of how responsive: price is to a change in the quantity supplied. the quantity supplied is to a change in quantity. the quantity supplied is to a change in price. price is to a change in income.

the quantity supplied is to a change in price.

When the product price falls from $40 to $30, the quantity demanded rises from 500 to 600 units. Using the simple formula the price elasticity of demand in this range is:

-0.80

When the product price falls from $40 to $30, the quantity demanded rises from 500 to 600 units. Using the simple formula the price elasticity of demand in this range is: -0.25. -0.3. -0.80. -1.25.

-0.80

When the product price falls from $90 to $80, the quantity demanded rises from 600 to 700 units. The price elasticity of demand is _____.

-1.5

When the product price falls from $80 to $60, the quantity demanded rises from 500 to 800 units. Using the simple formula the price elasticity of demand in this range is:

-2.40

Suppose that when the price of gasoline is $3 per gallon, the total amount of gasoline supplied in the United States is 8 million barrels per day. Also suppose that when the price of gas decreases to $2.25 per gallon, the total amount of gasoline supplied is 6 million barrels per day. Based on these numbers and using the simple formula the percentage change in price is

-25%

Suppose that when the price of gasoline is $3.50 per gallon, the total amount of gasoline supplied in the United States is 8 million barrels per day. Also suppose that when the price of gas decreases to $3 per gallon, the total amount of gasoline supplied is 6 million barrels per day. Based on these numbers and using the simple formula, the price elasticity of supply for gasoline is: 0.50. 1.75. 0.54. 1.85.

1.75

Suppose the price elasticity of supply for gasoline is 0.8. If the price of gasoline increases by 20%, the percentage change in the quantity of gasoline supplied is __________________%.

16

When the product price falls from $80 to $60, the quantity demanded rises from 500 to 800 units. The slope in this range is

Answer : -0.067 P1 = 80, P2 = 60 Q1 = 500, Q2 = 800 Slope of the given range = Change in price / change in quantity demanded Slope of the given range = ( P2 - P1 ) / ( Q2 - Q1) = ( 60 - 80 ) / ( 800 - 500) = -20 / 300 = - 0.067

Suppose the price elasticity of supply for lumber is 2.4. If the price of lumber increases by 20%, how much would the quantity supplied of lumber change? 48% 12% 0.12%

Answer: 48% Reason: ES = (% change in QS of lumber)(% change in P of lumber) 2.4 = (% change in QS of lumber)20% = 48%

Suppose that the quantity of umbrellas demanded at a price of $6 is 3,000 units. The company's total revenue is $________________.

Blank 1: 18000 or 18,000

A price elasticity of demand of -0.50 means that if the price increases by 1% the quantity demanded will ___________by ___________%

Blank 1: decrease, fall, or drop Blank 2: .5 or 0.5

A price elasticity of supply of 0.50 means that if the price decreases by 1%, the quantity supplied will ______________ by _____________%.

Blank 1: decrease, fall, or drop Blank 2: .5, .50, 0.5, or 0.50

A price elasticity of demand of -1.25 means that if the price increases by 1% the quantity demanded will __________________ (one word) by __________________%.

Blank 1: decrease, fall, or drop Blank 2: 1.25

Supply is perfectly _____________when the value of the price elasticity of supply is infinity.

Blank 1: elastic

A price elasticity of supply that is calculated as 0.61 would be considered ____________.

Blank 1: inelastic

Which of the following statements are true? a) Slope uses changes in price and quantity. b)Slope is the inverse of elasticity. c)Elasticity is the inverse of slope. d)A relationship exists between slope and elasticity but they are not the same thing. e)The elasticity calculation uses percentage changes in price and quantity.

Slope uses changes in price and quantity. A relationship exists between slope and elasticity but they are not the same thing. The elasticity calculation uses percentage changes in price and quantity.

Which of the following is true? Price elasticity of demand and slope are the same along a non-linear demand curve. Price elasticity of demand and slope are the same along a linear demand curve. Price elasticity of demand and slope are not always the same along a non-linear demand curve. Price elasticity of demand and slope are not always the same along a linear demand curve.

Price elasticity of demand and slope are not always the same along a linear demand curve. Price elasticity of demand and slope are not always the same along a non-linear demand curve.

The slope of a linear demand curve is _____ along the curve. convex constant increasing decreasing

constant

When the product price falls from $80 to $60, the quantity demanded rises from 500 to 800 units. Using the simple formula the price elasticity of demand in this range is: a) -0.62. b) -0.067. c) -15. d) -2.40.

d) -2.40.

The slope of a linear demand curve: is constant along the curve. is upward-sloping. always equals 1. is variable along the curve.

is constant along the curve.

Because a direct relationship exists between price and quantity supplied,: price elasticity of supply is positive. price elasticity of supply can never be zero. price elasticity of supply cannot be calculated. all elasticities are negative.

price elasticity of supply is positive.

The slope of a linear demand curve is: the change in price divided by the change in quantity demanded. the change in price multiplied by the change in quantity demanded. the change in quantity demanded multiplied by the change in price. the change in quantity demanded divided by the change in price.

the change in price divided by the change in quantity demanded.