elasticity

If a tiny increase in the price of a good reduces quantity demanded to zero, demand is ________________ and the price elasticity of demand is

perfectly elastic; equal to infinity.

The price elasticity of demand measures how much

quantity demanded responds to a change in price.

Which of the following statements about a downward sloping straight line demand curve is correct?

Demand becomes more inelastic as price declines.

When Claudia goes to the gas station she buys 10 gallons of gas no matter what the price per gallon. What does this imply about her price elasticity of demand for gasoline?

It is perfectly inelastic.

The price elasticity of demand is defined as the:

Percentage change in quantity demanded divided by the percentage change in price.

The price elasticity of demand indicates

a buyer's responsiveness to price changes.

If demand for a product is perfectly inelastic, a tax of $1 per unit imposed on sellers will

cause the market price to rise by $1 per unit.

Tobacco is a normal, income inelastic good. It follows that a 10 percent decrease in income will __________ quantity demanded by __________ than 10 percent.

decrease; less

For a straight-line, downward-sloping demand curve, price elasticity of demand

decreases as we move down and along the curve from higher to lower prices.

The price elasticity of demand for a given good is 2.3. This implies that if price

rises by 20 percent, quantity demanded falls 46 percent.

If the demand for a good is unit elastic, then

the percentage change in quantity demanded is equal to the percentage change in price.