Chapter 6 Micro

The demand for textbooks is price inelastic. Which of the following would explain this? - Many alternative textbooks can be used as substitutes. - Students have a lot of time to adjust to price changes. - Textbook purchases consume a large portion of most students' income. - The good is a necessity.

- The good is a necessity.

If a good has a price inelastic demand, then which of the following is not likely to be characteristic of this good? - The good is a necessity and is relatively unimportant in the household budget. - There are many substitutes for the good. - Consumers spend a small percentage of their income on the good. - Consumers do not have much time to adjust to market changes.

- There are many substitutes for the good.

As calculated, the price elasticity of demand is: - always positive. - always greater than 1. - usually equal to 1. - always negative.

- always negative.

As you move down a linear demand curve, the price elasticity of demand will: - increase. - decrease. - increase and then decrease. - decrease and then increase.

- decrease.

On a linear demand curve: - demand is elastic at high prices. - demand is inelastic at high prices. - elasticity is the same at all points on the demand curve. - demand is elastic at low prices.

- demand is elastic at high prices.

After a price decrease, the quantity effect tends to: - decrease total revenue. - increase total revenue. - make the price effect stronger. - make the price effect weaker.

- increase total revenue.

If a good is a necessity with few substitutes, then the price elasticity of demand will tend to be: - more price-elastic. - less price-elastic. - equal to 1. - the same as that of a luxury good.

- less price-elastic.

Supply curves tend to be more ________ the greater the time period facing the producer. - price-inelastic - price-elastic - steeply sloped - inflexible

- price-elastic

Along the upper end of a linear demand curve, the price elasticity of demand will be: - price-inelastic. - price-elastic. - price unit-elastic. - negative.

- price-elastic.

Along the lower end of a linear demand curve, the price elasticity of demand will be: - price-inelastic. - price-elastic. - price unit-elastic. - negative

- price-inelastic.

If a change in price causes total revenue to change in the same direction, we can conclude that the demand is: - price-inelastic. - price-elastic. - price unit-elastic. - normal.

- price-inelastic.

The price elasticity of demand is computed as the percentage change in: - quantity demanded divided by the percentage change in quantity supplied. - price divided by the percentage change in quantity demanded. - quantity demanded divided by the percentage change in income. - quantity demanded divided by the percentage change in price.

- quantity demanded divided by the percentage change in price.

The price elasticity of demand measures the responsiveness of the change in: - quantity demanded to a change in price. - price to a change in quantity demanded. - the slope of the demand curve to a change in price. - the slope of the demand curve to a change in quantity demanded.

- quantity demanded to a change in price.

When price goes down, the quantity demanded goes up. Price elasticity measures how: - much the price goes down. - much the quantity goes up. - responsive the price change is in relation to the quantity change. - responsive the quantity change is in relation to the price change.

- responsive the quantity change is in relation to the price change

If an increase in the price of a good leads to an increase in total revenue, then: - the supply curve must be price inelastic. - the demand curve must be price inelastic. - the supply curve is price elastic. - the demand curve must be price elastic.

- the demand curve must be price inelastic.

The price elasticity of a good will tend to be greater: - the longer the relevant time period. - the fewer the number of substitute goods available. - if it is a staple or necessity with few substitutes. - if the share of income spent on the good is small.

- the longer the relevant time period.

The price elasticity of demand for a good such as water is likely to be very low because: - the price is very low. - water has some good substitutes. - water is considered a luxury. - the share of income spent on water is large.

- the price is very low.

If demand is elastic, then: - the price effect dominates the quantity effect, and a fall in price will cause total revenue to rise. - the price effect dominates the quantity effect, and an increase in price will cause total revenue to rise. - the quantity effect dominates the price effect, and an increase in price causes total revenue to rise. - the quantity effect dominates the price effect, and a decrease in price causes total revenue to rise.

- the quantity effect dominates the price effect, and a decrease in price causes total revenue to rise.

Which of the following is not a factor in determining the price elasticity of demand? - the number of available substitutes - the time period involved - the proportion of the budget spent on the item - the slope of the supply curve

- the slope of the supply curve

A perfectly price-inelastic demand curve is: - horizontal. - downward-sloping. - upward-sloping. - vertical

- vertical