Chapter 6
Refer to the diagram. In the P1P2 price range, demand is:
relatively elastic.
Refer to the diagram. In the P3P4 price range, demand is:
relatively inelastic.
The demand for a luxury good whose purchase would exhaust a big portion of one's income is:
relatively price elastic.
The demand for a necessity whose cost is a small portion of one's total income is:
relatively price inelastic.
The price elasticity of supply measures how:
responsive the quantity supplied of X is to changes in the price of X.
Which of the following goods will least likely suffer a decline in demand during a recession?
Toothpaste
The price elasticity of demand coefficient measures:
buyer responsiveness to price changes.
The basic formula for the price elasticity of demand coefficient is:
percentage change in quantity demanded/percentage change in price.
The formula for cross elasticity of demand is percentage change in:
quantity demanded of X/percentage change in price of Y.
The more time consumers have to adjust to a change in price,
the greater will be the price elasticity of demand.