Microeconomics Chapter 4

If quantity demanded goes down by 3 percent when price rises by 6 percent, then the price elasticity of demand is...

0.5

If a 5% increase income leads to a 2.5% decrease in the quantity of oatmeal demanded, then the absolute value of the income elasticity of demand for oatmeal is

0.5%

If the income elasticity of demand for iPhones is 1.3, then a 10% decrease income will lead to a _______ in the quantity of iPhones demanded

13% decrease- a 13% decrease since 1.3 x -10=13

Which of the following is the formula for the price elasticity of demand

P 1 --- X --- Q slope

If the owners of a nearby restaurant decrease the price of their food, then their total revenue

could increase since more people may be willing to eat there

If the price of sofas goes up by 10% and the quantity of sofas demanded falls by 15%, then the total expenditure on sofas will

decrease

If there's an increase in the supply of bottled water (a rightward shift), then total revenue from the sale of bottle water will.....

decrease if the price elasticity of demand for bottled water less than one

Suppose the demand for first-class airline tickets is inelastic with respect to price. If the price of first-class airline tickets decreases, then total expenditure will.....

decrease- if demand is inelastic with respect to price, total expenditure will decrease in response to a price decrease

The price elasticity of demand for water will be _______ in the long rung than in the short run

higher

If a store has a 10% off everything sale, then the store's total revenue will fall

if the demand for the store's products in inelastic with respect to price

If the demand for economy-class airline tickets is elastic with respect to price, then if the price of economy-class airline tickets decreases, then total expenditure will

increase

The price elasticity of supply will tend to be higher when

its easy to find or product substitute inputs and the time horizon is longer

Suppose a local politician proposed that the price of lottery tickets be cut in half in order to reduce the total amount that people spend on lottery tickets. This plan will...

only be effective if the demand for lottery tickets in inelastic with respect to price

If the price elasticity of demand in infinite, then demand is

perfectly elastic

If the price elasticity of supply is infinite, then supply is

perfectly elastic

If the price elasticity of demand is zero, the demand is

perfectly inelastic

The percentage change in quantity demanded that results from a 1% change in price is the ________

price elasticity of demand

Total expenditure equals

P x Q and total revenue

If the price elasticity of demand for electricity is 1.20, then if the price of elasticity goes up by 10%, the quantity of electricity demanded will

go down by 12%

If the price of elasticity of demand for coffee is , and the price of coffee goes down by 1%, then the quantity of coffee demanded will

go up by 0.25%

Given that most people spend a relatively small share of their budget on pencils, we would expect the elasticity of demand for pencils to be relatively

low- the smaller the share of people's budget an item accounts for, the lower will be the price elasticity of demand

When the price elasticity of demand is greater than 1, changes in price and changes in total expenditure

move in opposite directions

When the price elasticity of demand is less than 1, changes in price and changes in total expenditure

move in the same direction

If ground beef is an inferior good, then the income elasticity of demand for ground beef will be

negative

If supply if perfectly inelastic with respect to price, then the price of elasticity of supply is

zero

The elasticity of supply of

the percentage change in quantity supplied in response to a 1% change in price

The cross-price elasticity of demand is

the percentage change in the quantity demanded of one good in response to a 1% change in the price of another good

The cross-price elasticity of demand for popcorn with respect to the price of butter is

the percentage change in the quantity of popcorn demanded in response to a 1% change in the price of butter

Price X quantity equals

total expenditure and total revenue

If the price elasticity of demand for restaurant meals is $1.63, then the demand for restaurant meals is....

elastic

Given that there are many different kinds of cereal that people can buy, the price elasticity of demand for any particular brand of cereal is likely to be relatively

high

If Sal's pizzeria uses tomato sauce, dough, and cheese to make both pizza and calzones, then the price elasticity of supply for pizza at Sal's is likely to be relatively

high

Low- income families spend a greater share of their budget on electricity than do high-income families. Thus, we would expect the price elasticity of demand for electricity to be ______ for low-income families than for high-income famililes

higher

A consumer's weekly demand for gasoline is likely to be ____ price elastic than his or her yearly demand for gasoline

less- the price elasticity of demand will be lower in the short run than in the long run

The price elasticity of demand is

the percentage change in quantity demanded that results from a 1 percent change in price

The income elasticity of demand is

the percentage change in quality in demanded in response to a 1% change in income