CH 4 sec 1,2,3

A perfectly elastic supply curve is:

horizontal

The longer the time period considered, the elasticity of supply tends to:

increase

If the elasticity of supply of bangles is equal to 1, an increase in the price of bangles will:

increase the quantity supplied and increase total revenue.

Elasticity of demand will ____ as the availability of substitutes ____.

increase; decreases decrease;increase both a. and c.

The elasticity of supply is defined as the ____ change in quantity supplied divided by the ____ change in price.

percentage; percentage

If the demand is perfectly inelastic, what would happen to the quantity demanded if there is a tiny increase in price?

quantity demanded will remain the same

Fantastic Cuts Hair Salon knows that a 15% increase in the price of their haircuts will result in a 5% decrease in the number of haircuts sold. What is the elasticity of demand facing Fantastic Cuts?

.33

If the elasticity of supply of a good was 2, how much would the price have to increase to lead to an increase in output of 6 percent?

3 percent.

Which of the following is false?

The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. If demand is elastic, it means the quantity demanded changes by a relatively larger amount than the price change. If demand is inelastic, it means the quantity demanded changes by a relatively smaller amount than the price change. All of the above are true.

If the price elasticity of demand was 4.0 (in absolute terms), a 10% off sale would lead to:

a 40% increase in purchases by customers.

If the elasticity of demand for bangles is equal to 1, an increase in price will:

decrease the quantity demanded but leave total revenue unchanged.

A 10% decrease in the price of energy bars leads to a 20% increase in the quantity of energy bars demanded. It appears that:

demand is elastic and total revenue will increase.

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded. The demand curve facing this firm is:

elastic

Demand is said to be ____ when the quantity demanded is very responsive to changes in price.

elastic

The Shoe Emporium reduces the price of its shoes by 50% and finds that the quantity demanded for its shoes more than doubles. The demand for shoes from The Shoe Emporium appears to be:

elastic

A price cut will increase the total revenue a firm receives if the demand for its product is:

elastic.

If the supply curve for a product is vertical, then the elasticity of supply is:

equal to zero.

Which of the following would most likely feature elastic demand?

fresh green beans

Price elasticity of demand is defined as:

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

The Book Nook reduces prices by 20%. If the dollar value of The Book Nook's sales remain constant, it indicates that:

the quantity of books sold increases by 20%.