AP Microeconomics Elasticity
Income elasticity of demand
can be positive or negative.
If an increase in the price of dibbles causes a decrease in the demand for dabbles, then dibbles and dabbles are considered
complements.
If a product has inelastic demand, then
consumers will not respond much to a change in the price.
If the price elasticity of demand is equal to 5, a 2% increase in price will cause the quantity demanded to ______________ by ______________ percent.
decrease; 10
If a musician's agent believes that an increase in concert ticket prices will increase total revenue, than the agent must believe that the price elasticity of demand for the concert tickets is
inelastic.
When the demand curve is a horizontal line, demand is
perfectly elastic.
A vertical supply curve represents a price elasticity of supply that is
perfectly inelastic.
The tax burden is heavier on consumers when demand is
perfectly inelastic.
For a given downward-sloping, linear demand curve, total revenue is maximized at the point where
price elasticity is equal to 1.
Suppose as the price of peaches falls from $3 per pound to $2 per pound, the quantity demanded of peaches rises from 10,000 pounds to 14,000 pounds. Using the midpoint formula, what is the price elasticity of demand?
.83
Suppose the price of a product increases from $10 to $20 and the quantity demanded decreases from 100 units to 90 units. Using the midpoint formula, what is the price elasticity of demand?
0.158
As consumer income increases from $1,000 per month to $2,000 per month, the demand for Good Y increases from 20 units per month to 60 units per month. What can be said about the nature of Good Y?
Good Y is a luxury good.
A local grocery store recently raised its prices and found that total revenue declined. Using the total revenue test, what can be concluded about the price elasticity of demand for groceries at this particular store?
The demand for groceries at this store is elastic.
Which characteristic below would be associated with a product that has inelastic demand?
The good is needed immediately.
Suppose the market for apples has a price elasticity of 0.43 and the market for pears has a price elasticity of 0.76. A correct comparison of the two markets would be
The market for pears is more elastic than the market for apples.
Mike buys one cheeseburger a day regardless of the price of the cheeseburger. Which of the following statements is correct in terms of Mike's elasticity of demand for cheeseburgers?
The price elasticity of demand is zero.
If the demand for apples is elastic, then a 5 percent increase in the price of apples will result in
a more than 5% decrease in the quantity demanded of apples.
If the price of a good increases by 10% and total revenue stays the same, then the price elasticity of demand for this good over this range of prices must be
equal to 1.
If the cross price elasticity between Good A and Good B is equal to 1.4, the products are
substitutes
If demand is perfectly elastic, then
the demand curve will be horizontal.