Macro Eco chapter 6 Quiz
For product XYZ, the price elasticity of demand has an absolute value of 3.5. This means that quantity demanded will increase by
3.5 percent for each 1 percent decrease in price, ceteris paribus.
Which of the following does not influence the price elasticity of demand?
Costs of production.
When the percentage change in quantity demanded is less than the percentage change in price, ceteris paribus,
Demand is inelastic
When demand is elastic, the absolute number for price elasticity will be
Greater than 1.
A demand curve that is completely elastic is
Horizontal.
Elasticity of supply shows us
How much sellers will increase production in response to a change in price
Cross-price elasticity refers to
How responsive consumers of one good are to a change in the price of another good.
Elasticity of supply looks at
How responsive sellers are to a change in price.
Price elasticity of demand refers to
How sensitive buyers are to a change in price.
When demand is price-inelastic, ceteris paribus, an increase in
Price leads to greater total revenue.
Income elasticity measures the
Responsiveness of quantity demanded to a percentage change in income.
The demand for normal goods
Rises when incomes rises
Which of the following is not a determinant of the price elasticity of demand?
The amount of income the consumer has.
If demand is perfectly elastic,
The demand curve is horizontal.
If demand is price-elastic, then
The elasticity number E is greater than 1.
Total revenue is equal to
The income from sales.
The basic formula for price elasticity is
The percentage change in quantity demanded divided by the percentage change in price.
The price elasticity of demand is equal to
The percentage change in quantity demanded divided by the percentage change in price.
If the demand for a product is elastic, then
The percentage change in quantity demanded is greater than the percentage in price.
The formula for the elasticity of supply is
The percentage change in quantity supplied divided by the percentage change in price.
The formula for cross-price elasticity is
The percentage change in the quantity demanded for one good divided by the percentage change in the price of another good.
A demand curve that is perfectly inelastic is
Vertical.
If the price elasticity of demand is equal to 2, the good has _____ demand.
elastic
