Micro assignment 3
If consumers completely cease purchasing a product when its price increases by any amount, then demand is
perfectly elastic
when calculating price elasticity of demand, if the percentage change in price is negative, then the percentage change in quantity demanded is typically
positive
Suppose that if the price of plane tickets increased, more people would choose to travel by train. If this happened, you would know that:
the cross-price elasticity between plane tickets and train tickets is positive.
When Joe's Gas raises its price for regular unleaded gasoline, total revenue from regular unleaded gas falls to zero. It must be the case that
the demand for Joe's regular unleaded gasoline is perfectly elastic
the tendency for someone to purchase more of a good or service as its price falls is captured by
the law of demand
if 20% increase in the price of a good leads to a 60% decrease in the quantity demanded, then what is the price elasticity of demand
3
if two products are substitutes, then the
cross price elasticity of demand between them will be positive
the responsiveness of the quantity demanded of one good to a change in the price of a different good is measured by the
cross-price elasticity of demand
if the price elasticity of demand for a good is greater than one, then the demand for that good is
elastic
if the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then demand for textbooks is
inelastic
If demand is ______ with respect to price, a price increase will ______ total revenue.
inelastic, increase
suppose two demand curves intersect and so have a point in common. At that point, demand shown by the steeper curve will be _____ the flatter curve
less elastic than
If most consumer goods and services are ______, then most income elasticities are ______.
normal; positive
the price elasticity of demand for a good measures the responsiveness of
quantity demanded to a one percent change in price of that good