Chapter 5
Economists compute the price elasticity of demand as the
Change in quantity demanded divided by the change in the price
If a 10% decrees in price for a good result in a 20% increase in quantity demanded, the price elasticity of demand is
2
If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a
20 perent decrease. in the quantity demanded
Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Wich of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?
A 13.33 percent increase in thr price of the good.
If the price elasticity of demand for a good is 0.4, then which of the following events is consistent with a 2 percent decrease in the quantity of the good demanded?
A 5 percent increase in the price of the good
Suppose that demand is inelastic within a certain price range. For that price range,
A decrease in price would increase total revenue the increase in quantity demand is proportionately smaller than the decrease in price
If the price of walnuts rises, many people would switch from consuming walnuts to consuming pecans. But if the price of salt rises, people would have difficulty purchasing something to use in its place. These examples illustrate the importance of
A necessiti versus a luxury in determining the price elasticity of demand
The demand for Godiva mint chocolates is likely quite elastic because
A) There are many close substitutes. B)This particular type of chocolate is viewed as a luxury by many chocolate lovers. C)The market is narrowly defined D) All of the above
Which of the following statements is correct?
A)The demand for flat-screen computer monitors is more elastic than the demand for monitors in general. B)The demand for grandfather clocks is more elastic than the demand for clocks in general C)The demand for cardboard is more elastic over a long period of time over a short period of time. D) All of the above
Which of the following is likely to have the most price inelastic demand?
Cookies
Demand is said to bo price elastic if
Buyers respond substantially to changes in the price of the good
Which of the following is likely to have the most price inelastic demand?
Gasoline in the short run
If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?
Immediately after the price increase
A person who takes a prescripton drug to control high cholesterol most likely has a demand for that drug that is
Inelastic
Which of the following is likely to have the most price elastic demand?
Music downloads
For a horizontal demand curve,
The slope is equal to 0, and the price elasticity of demand is undefined.
which of the following is likely to have to most price elastic demand.
blue jeans
When the price of an eBook is $15.00, the quantity demanded is 400 eBooks per day. When the price falls to $10.00, the quantity demanded increases to 700. Given this information and using the midpoint method, we know that the demand for eBooks is
elastic
Other things equal, the demand for a good tends to be more inelastic, the
fewer the available substitutes
Elasticity of demand is closely related to the slope of the demand curve. The less responsive buyers are to a change in price, the
flatter the demand curve will be
A good will have a more inelastic demand, the
greater the availability of close substitutes
The smaller the price elasticity of demand, the
greater the responsiveness of qunatity demanded to a change in price
When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint methods we know that the demand for candy bars is
inelastic
When demand is inelastic, a decrease in price will cause
no change in total revenue but an increase in quanity demanded
As we move downward and to the right along a linear, downward-slopping demand curve,
slope changes but elasticity remains constant