Unit 2's Chapter 5 Quiz

responsiveness of quantity demanded to a change in price.

The price elasticity of demand measures the:

consumers are not very responsive to changes in price.

When demand is inelastic:

elastic

Youth smoking seems to be more __________ than adult smoking—that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price.

Elasticity

__________ is the change in what is on the horizontal axis (quantity) divided by the change in what is on the vertical axis (price).

total revenue will decrease.

A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the quantity of cereal demanded. As a result:

horizontal.

A perfectly elastic supply curve is:

Unit Elastic

Demand is said to be __________ when the quantity demanded changes at the same proportion as the price.

elastic

Demand is said to be ___________ when the quantity demanded is very responsive to changes in price.

inelastic

Demand is said to be _____________ when the quantity demanded is not very responsive to changes in price.

rise and the equilibrium quantity to stay the same.

If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:

increase the quantity exchanged but result in no change in the price.

If the demand curve is perfectly elastic, then an increase in supply will:

equal to 0

If the supply curve for a product is vertical, then the elasticity of supply is:

equal to zero.

If the supply curve for a product is vertical, then the elasticity of supply is:

stay the same and the equilibrium quantity to fall.

If the supply curve for aspirin is perfectly elastic, then a reduction in demand will cause the equilibrium price to:

fall and the equilibrium quantity to stay the same.

If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to:

3.0

Let's pretend Emil's Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Emil's Barber Shop?

their cross price elasticities are greater than zero.

Let's pretend cola and iced tea are good substitutes for consumers. Then it is likely that:

their cross price elasticities are less than zero.

Let's pretend pretzel rods and jalapeno and cheddar cheese are good complements for consumers. Then it is likely that:

increasing the price of game tickets because demand is inelastic.

Let's pretend the price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:

3

Let's pretend you play golf 5 times per month when the price is $20 and 2 times per month when the price is $24. What is the price elasticity of your demand curve?

2

Let's pretend you purchase 4 pizza per month when the price is $20 and 6 pizzas per month when the price is $15. What is the price elasticity of your demand curve?

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

Price elasticity of demand is defined as:

elastic

Supply is said to be ____________ when the quantity supplied is very responsive to changes in price.

inelastic; elastic

Taxes on goods with __________ demand curves will tend to raise more tax revenue for the government than taxes on goods with __________ demand curves.

5 units

The demand for a product is unit elastic. At a price of $20, 10 units of a product are sold. If the price is increased to $40, then one would expect sales to equal:

percentage; percentage

The elasticity of supply is defined as the ________ change in quantity supplied divided by the _______ change in price.

increase

The longer the time period considered, the more the elasticity of demand tends to: