econ

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept.

If the price elasticity of demand is 1.5, regardless of which two points on the demand curve are used to compute the elasticity, then demand is

elastic, and the demand curve is something other than a straight, downward-sloping line.

How does total revenue change as one moves downward and to the right along a linear demand curve?

first incr, then dec

The difference between slope and elasticity is that slope

is a ratio of two changes, and elasticity is a ratio of two percentage changes.

On a downward-sloping linear demand curve, total revenue reaches its maximum value at the

midpoint of demand curve

Whether a good is a luxury or necessity depends on the

preferences of buyer

When consumers face rising gasoline prices, they typically

reduce their quantity demanded more in the long run than in the short run.

Suppose that Juan Carlos is filling out a survey that he received in the mail. The survey asks him what he would do if the price of his favorite toothpaste increased. Juan Carlos reports that he would switch to a different brand. The survey asks what he would do if the price of all toothpastes increased. Juan Carlos reports that he must use toothpaste, so he would have to adjust his spending elsewhere. These examples illustrate the importance of

the definition of a market in determining the price elasticity of demand.

Suppose demand is perfectly elastic, and the supply of the good in question decreases. As a result,

the equilibrium quantity decreases, and the equilibrium price is unchanged.

For a horizontal demand curve

the slope is equal to 0, and the price elasticity of demand is undefined.

For a vertical demand curve,

the slope is undefined, and the price elasticity of demand is equal to 0.

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is

unit elastic