Chapter 4 (MC)
negative, and therefore these goods are complements
suppose that a 20% increase in the price of normal god Y causes a 10% decline in the quantiy demanded of normal good X. The coefficient of cross elasticity of demand is:
a higher price to the group that has the less elastic demand
suppose that a firm has "pricing power" and can segregate its market into two distinct groups based on differences in elasticities of demand. The firm might charge:
Consumer are largely unresponsive to a per unit price change
the demand for a product is inelastic with respect to price if:
relatively price inelastic
the demand schedules for such products as eggs, bread, and electricity tend to be:
amount of time the producer has to adjust inputs in response to a price change
the main determinant of elasticity of supply is the:
the greater will be the price elasticity of demand
the more time consumers have to adjust to a change in price:
the larger the number of subsitutes and the greater the price elasticity of demand
the narrower the definitions of a product:
negative, but the minus sign is ignored
the price elasticity of demand is generally:
responsive the quantity supplied of X is to changes in the price of X
the price elasticity of supply measures how:
does not apply to supply because price and quantity are directly related
the total-revenue test for elasticity:
the short-run supply curve for pork is less elastic than the long-run supply curve for pork
It takes a considerable amount of time to increase the production of pork
more elastic than the demand for the original software
Microscoft charges a substantially lower pice for a software upgrade than for the initial purchase of the software. This implies that Microsoft views the demand curve for the software upgrade to be:
From which th percentage price change is calculated is large and the original quantity from which the percentage change in quantity is calculated is small
Most demand curves are relatively elastic in the upper-left portion becuase the original price:
relatively elastic
Other things the same, if a price change causes total revenue to change in the opposite direction, demand is:
greater in the long run than in the short run
Price elasticity of demand is generally:
positive, indicating substitute goods
We would expect the cross elasticity of demand between Pepsi and Coke to be:
negative, indicating complementary goods
We would expect the cross elasticity of demand between dress shirts and ties to be:
there are fewer good subsititutes for soft drinks as a whole than for Pepsi specifically
We would expect the cross elastiity of demand for Pepsi to be greater in relation to other soft drinks than that for soft drinks in general because:
an increase in price will increase total revenue
When the percentage change in price is greater than the resulting percentage change in quantity demanded:
demand is elastic at high prices
for a linear demand curve:
relatively elastic
if price and total revenue vary in opposite direction, demand is:
increase the quantity demanded, but total revenue will be unchanged
if the price elasticity of demand for a product is unity, a decrease in price will:
equilibrium quantity but equilibrium price will be unchanged
if the supply of product X is perfectly elastic, an increase in the demand for it will increase:
the sensitivity of consumer purchases to price changes
The concept of price elasticity of demand measures:
More inelastic the demand for the product
A leftward shift in the supply curve of product X will increase equilibrium price to a greater extent the:
graphs as a line parallel to the vertical axis
A perfectly inelastic demand curve:
can be represented by a line parallel to the verical axis
A perfectly inelastic demand schedule:
perfectly elastic
A demand curve which is parallel to the horizontal axis is:
perfectly elastic
A firm can sell as much as it wants at a constant price. Demand is thus:
a change in price will have no effect on the quantity supplied
A supply curve that is a vertical straight line indicates that:
a change in demand will change the equilibrium quantity but not price
A supply curve that is parallel to the horizontal axis suggests that:
increase street crime because the addict's demand for heroin is highly inelastic
An antidrug policy which reduces the supply of heroin might:
the less elastic the supply curve
An increase in demand will increase equilibrium price to a greater extent:
negative, and therefore X is an inferior good
Assume that a 3% increase in income accross the economy produces a 1% decline int eh quantity deanded of good X. The coefficient of income elasticity of deman for good X is:
Positive and therefore X is a normal good
Assume that a 4% increase in income across the economy produces an 8 % increase in the quantity demanded of good X. The coefficent of income elasticity of demand is:
positive and therefore X is a normal good
Assume that a 6% increase in income in the economy produces a 3% increase in the quantity demnded of good X. The coefficient of income elasticity of demand is:
colleges charging lower tuition for low-income students
Based on the concept of price elasticity of demand, which of the following cases is most likely to occur
tea to be positive, but negative for cream
Compared to coffee, we would expect the cross elasticity of demand for:
the price of some other product
Cross elasticity of demand measures how sensitive purchses of a specific product are to changes in:
ace bandage; firm rubber tie-down
Elastic demand is analogous to a ____________ and inelastic demand to a _____________.
quantity stretch
Elasticity can be though of as degree of relative:
the price elasticity of demand for farm products is less than 1
Farmers often find that large bumper crops are associated with declines in their gross incomes. This suggests that:
in the long run
For an increase in demand the price effect is smallest and the quantity effect is largest:
relatively inelastic
Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired. GSU is assuming that the demand for education at GSU is:
greater than one
If a demand for a product is elastic, the value of the price elasticity coefficient coefficient is:
cause the firm's total payroll to decline
If a firm's demand for labor is elastic, a union-negotiated wage increase will:
perfectly inelastic
If quantity demanded is completely unresponsive to price changes, demand is:
inelastic
If the University Chamber Music Society decides to raise ticket prices to provide more funds to finance concerts, the Society is assuming that the demand for tickets is:
increase the amount demanded by more than 10 percent
If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will:
decease
If the demand for farm products is price inelastic, a good harvest wil cause farm revenues to:
decrease the quantity of X demanded by less than 4 percent
If the demand for product X is inelastic, a 4 % increase in the price of X will:
lard is an inferior good
If the income elasticity of demand for lard is -3.00, this means that:
an increase in the minimum wage would increase the total incomes of eenage works as a group
Studies of hte minimum wage suggest that the price elasticity of demand for teenage workers is relatively inelastic. This means that:
price inelastic in both the short and long run
Studies show that the demnd for gasoline is:
more elastic in the long run because there is time for firms to enter or leave the industry
Supply curves tend to be:
demand will become less price elastic
Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business. Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time. We can expect that each successive week:
positive and therefore these goods are substitutes
Suppose that a 10% increase in the price of normal good Y causes a 20% increase in the quantity demanded of normal good X. the coefficient of cross elasticity of demand is:
a 10 % increase in income will increase the purchase of toys by 20 percent
Suppose the income elasticity of demand for toys is +2.00. this means that:
No conclusion can be reached with respect to the elasticity of supply
Suppose the price of a product rises and the total revenue of sellers increases
will increase but equilibrium quantity will be unchanged
Suppose the supply of product X is perfectly inelastic. If there is an increase in the demand for this product, equilibrium price:
Percentage change in quantity demanded/percentage change in price
The basic formula for the price elasticity of demand coefficient is:
relatively price elastic
The demand for a luxury good whose purchase would exhaust a big portion of one's income is:
relatively price inelastic
The demand for a neccessity whose cost is a small portion of one's total income is:
less price elastic than the demand for Honda Accords
The demand for autos is likely to be:
the greater the amount of time over which buyers adjust to a price change
The elasticity of demand for a product is likely to be greater
quantity demanded of X/ percentage change in price of Y
The formula for cross elasticity of demand is percentage change in:
Smaller the resulting price change for an increase in supply
The larger the coefficient of price elasticity of demand for a product, the:
greater their substitutability
The larger the positive cross elasticity coefficient of demand between producs X and Y, the:
Buyer responsiveness to price changes
The price elasticity of demand coefficient measures:
Elastic in high-price ranges and inelastic in low-price ranges
The price elasticity of demand of a straight-line demand curve is:
the supply of old baseball cards is price inelastic
The price of old baseball cards rises rapidly with increases in demand because:
demand for education at GSU is inelastic
The state legislature has cut Gigantic State Univeersity's appropriations. GSU's Board of Regents decided to increase tuition fees to compensate for the loss of revenue. The board is assuming that the:
perfectly inelastic
The supply curve of a one-of-a-kind original painting is:
relatively elastic
The supply curve of antique reproductions is:
perfectly inelastic
The supply of known Monet paintings is:
