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If a price change has no effect on total revenue, this indicates that the coefficient of elasticity is

1

A decrease in demand in the momentary period will

Decrease price with quantity remaining unchanged

Total revenue will not keep on increasing if a firm raises its price because

Demand will become elastic

Other things equal, if the price elasticity of demand is one in the short run, in the long run it will be

Greater than one

A perfectly elastic demand curve is

Horizontal

The elasticity of supply measures

How responsive suppliers are to price changes

Supply is the most elastic

In the long run

In the market period the increase in demand will

Increase equilibrium price, but not equilibrium quantity

In the momentary period, an increase in demand will

Increase price, but not quantity

A momentary supply curve is:

Inelastic since output is fixed

A perfectly inelastic demand curve

Is vertical

Increases and decreases in income have the strongest effect on

Luxury goods

Supply curves, S1, S2, and S3 apply to the

Market period, short run, and long run respectively

As compared to supply in the market period, a short-run supply curve is likely to be

More elastic

If there are many substitutes for a product, demand will be

More elastic

We can say that supply in the short run is

More elastic than in the momentary period

Other things the same, the demand for a good will tend to be

More elastic, the larger the portion of consumers' income spent on the good

When a consumer spends a small portion of his budget on a good, the demand will generally be

More inelastic

Price elasticity of demand for a commodity tends to be greater

The more substitutes there are for it

Elasticity of supply is a measure of the extent to which the quantity of a good supplied changes in response to a change in:

The price of the good itself

The cross price elasticity of demand measures the responsiveness of

The quantity of Y to changes in the price of X

The most important determinant of the elasticity of supply is

The time period firms have to adjust to the new price

A firm increases price and its total revenues increase. Hence, we know that

its demand is price inelastic

What does cross-price elasticity measures?

The identification of complements and substitutes

The main determinant of elasticity of supply is the

Amount of time the producer has to adjust inputs in response to a price change

If the income elasticity for a product is negative it suggests that the product is

An inferior good

The most important determinant of demand elasticity is the:

Availability of substitutes

A vertical demand curve implies that

Consumers are unresponsive to changes in price

A vertical demand implies that

Consumers are unresponsive to changes in price

The income elasticity of demand is the percentage change in

Quantity demanded divided by the percentage change in income

If the demand for a product is elastic, then total revenue will

Rise as price falls

A negative cross elasticity of demand indicates the goods are

Substitutes

With respect to the elasticity of supply in the momentary and long run we can say

Supply is more elastic in the long run than in the momentary period


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