Economics T or F Ch. 5

If the price of elasticity of demand is equal to 0, demand is unit elastic.

False. If the price of elasticity of demand is equal to 0, demand is PERFECTLY INELASTIC.

The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.

False. The demand for gasoline will respond more to a change in price over a period of five YEARS than over a period of five WEEKS.

The fatter the demand cure that passes through a given point, the more inelastic the demand.

False. The fatter the demand cure that passes through a given point, the more ELASTIC the demand.

If demand is perfectly inelastic, the demand curve is vertical, and elasticity is equal to 0.

True.

Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

False. Demand for a good is said to be ELASTIC if the quantity demanded increases substantially when the price falls by a small amount.

Demand is inelastic if the elasticity is greater then 1.

False. Demand is ELASTIC if the elasticity is greater then 1.

When the price of knee braces increases by 25 percent, the Brace Yourself Company increased their quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply of knee braces is 0.33.

False. Elasticity of supply equals: 75/25 = 3

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price, and elastic if the the quantity supplied responds only slightly to price.

False. Supply is said to be ELASTIC if the quantity supplied responds substantially to changes in the price, and INELASTIC if the the quantity supplied responds only slightly to price.

Supply tends to be more elastic in the short run and more inelastic in the long run.

False. Supply tends to be more INELASTIC in the short run and more ELASTIC in the long run.

The demand for Rice Krispies is more elastic than the demand for cereal.

True.

Demand for a good is said to be elastic if the quantity demanded increases substantially when the price falls by a small amount.

True.

Demand is elastic if the elasticity is greater then 1.

True.

Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.

True.

If a supply curve is horizontal it is said to be perfectly elastic and the price elasticity of supply approaches infinity.

True.

If the price of elasticity of demand is equal to 0, demand is perfectly inelastic.

True.

Necessities tend to have price inelastic demands, whereas luxuries have price elastic demands.

True.

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

True.

Supply is said to be elastic if the quantity supplied responds substantially to changes in the price, and inelastic if the the quantity supplied responds only slightly to price.

True.

Supply tends to be more inelastic in the short run and more elastic in the long run.

True.

The demand for gasoline will respond more to a change in price over a period of five years than over a period of five weeks.

True.

The fatter the demand cure that passes through a given point, the more elastic the demand.

True.

The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.

True.

When the price of knee braces increases by 25 percent, the Brace Yourself Company increased their quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply of knee braces is 3.

True.

The price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent. The price elasticity of demand is 3.

True. Elasticity of demand equals: 45/15 = 3