Econ 202 Ch 4
A
"Last October, due to an early frost, the price of a pumpkin increased by 10 percent compared to the previous year's price. As a result, the quantity demanded decreased from 2 million to 1.5 million." Based on this statement, the _______. A demand for pumpkins is elastic B demand for pumpkins is inelastic C demand for pumpkins is unit elastic D demand for pumpkins increased
elastic
Short-run supply is _____
negative
The cross elasticity of demand for a complement is ____
positive
The cross elasticity of demand for a substitute is _____.
D
The price elasticity of demand equals magnitude of the _________. A change in the price divided by the change in quantity demanded B change in the quantity demanded divided by the change in price C percentage change in the price divided by the percentage change in the quantity demanded D percentage change in the quantity demanded divided by the percentage change in the price
price elasticity of demand
units-free measure of the responsiveness of the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same.
inelastic
If a price cut decreases total revenue, demand is ____
elastic
If a price cut increases total revenue, demand is ____
unit elastic
If a price cut leaves total revenue unchanged, demand is ______
increases
If demand is elastic, a 1 percent price cut increases the quantity sold by more than 1 percent, and total revenue _______ (increases/decreases)
decreases
If demand is inelastic, a 1 percent price cut increases the quantity sold by less than 1 percent, and total revenues ________ (increases/decreases)
unchanged
If demand is unit elastic, a 1 percent price cut increases the quantity sold by 1 percent, and total revenue _______
normal
If the income elasticity of demand is greater than 1, demand is income elastic and the good is a _____ good
normal
If the income elasticity of demand is greater than zero but less than 1, demand is income inelastic and the good is a _____ good
inferior
If the income elasticity of demand is less than zero (negative) the good is a ____ good
B
In 2008, the price of cocoa beans increased more than 44 percent. In response to the increase in the price of cocoa beans, Rogue Chocolatier increased the price of its gourmet chocolate bars by 20 percent. Rogue says the quantity of its bars sold decreased by 15 percent. The price elasticity of demand for gourmet chocolate bars is ________. A elastic B inelastic C undefined D unit elastic
elastic
Long-run supply is the most _____
perfectly inelastic
Momentary supply is _____ ______
A
Netflix is the largest online DVD rental service offering flat rate rental-by-mail and online streaming to households. If Netflix increases its average flat rate by 10 percent and its total revenue increases, then the demand for Netflix subscriptions ___________. A is price inelastic B is price elastic C is unit elastic D income elastic
B
Suppose that when the price of oil is $60 per barrel, the quantity supplied is 70 million barrels a day, but when the price is $40 per barrel, the quantity of oil supplied is 69 million barrels a day. A The supply of oil is elastic. B The supply of oil is inelastic. C The demand for oil is inelastic. D The demand for oil is elastic
A
The cross elasticity of demand is calculated as the percentage change in the ________. A quantity demanded of one good divided by the percentage change in the price of another good B price of one good divided by the percentage change in the quantity demanded of another good C quantity demanded of one good divided by the percentage change in the quantity demanded of another good D price of one good divided by the percentage change in the price of another good.
The closeness of substitutes The proportion of income spent on the good The time elapsed since a price change
The elasticity of demand for a good depends on
Resource substitution possibilities Time frame for supply decision
The elasticity of supply depends on ________ & _________
D
The income elasticity of demand is defined as the percentage change in ________. A the quantity demanded resulting from a given percentage change in price B income divided by the percentage change in quantity demanded C the movement along the demand curve resulting from a change in income D the quantity demanded divided by the percentage change in income
income elasticity of demand
_____ ______ _____measures how the quantity demanded of a good responds to a change in income, other things remaining the same
elasticity of supply
_______ of ________ measures the responsiveness of the quantity supplied to a change in the price of a good, when all other influences on selling plans remain the same
%Q/%P
elasticity of supply formula
%Q/%P of complement
formula for cross elasticity of demand
%Q/%I
income elasticity of demand formula
cross elasticity of demand
measure of the responsiveness of demand for a good to change in the price of a substitute or a complement, other things remaining the same
total revenue test
method of estimating the price elasticity of demand by observing the change in total revenue that results from a price change (when all other influences on the quantity sold remain the same).
%Q/%P
price elasticity of demand equation
perfectly inelastic
price elasticity of demand is zero and the good has a______ __________ demand
unit elastic
the price elasticity of demand equals 1 and the good has ___ ____ demand
elastic
the price elasticity of demand is greater than 1 and the good has ____ demand
perfectly elastic
the price elasticity of demand is infinite and the good has a _____ ____ demand
inelastic
the price elasticity of demand is less than 1 and the good has ____ demand
total revenue
the sale of a good or service equals the price of the good multiplied by the quantity sold