econ quiz price elasticity
Most demand curves are relatively elastic in the upper-left portion because the original price:
is large and the original quantity from which the percentage change in quantity is calculated is small.
The demand for autos is likely to be:
less price elastic than the demand for Honda Accords.
the larger the number of substitutes and the greater the price elasticity of demand.
narrower the definition of a product:
The price elasticity of demand is generally:
negative but the minus sign is ignored.
The demand schedules for such products as eggs, bread, and electricity tend to be:
relatively price inelastic.
Compared to coffee, we would expect the cross elasticity of demand for:
tea to be positive, but negative for cream.
A manufacturer of frozen pizzas found that total revenue decreased when price was lowered from $5 to $4. It was also found that total revenue decreased when price was raised from $5 to $6. Thus,
the demand for pizza is elastic above $5 and inelastic below $5.
The more time consumers have to adjust to a change in price:
the greater will be the price elasticity of demand.
It takes a considerable amount of time to increase the production of pork. This implies that:
the short-run supply curve for pork is less elastic than the long-run supply curve for pork.
A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes. true or false
true
Antiques tend to have highly inelastic supply curves. true or false
true
The greater the ease of shifting resources from product X to product Y in the production process, the greater is the elasticity of supply of product Y. true or false
true
Suppose the price of a product rises and the total revenue of sellers increases.
No conclusion can be reached with respect to the elasticity of supply.
Which goods (with their respective income elasticity coefficients in parentheses) will most likely suffer a decline in demand during a recession?
Plasma screen TV
In which of the following instances will total revenue decline?
Price rises and demand is elastic.
In which of the following cases will total revenue increase?
Price rises and demand is inelastic.
The price elasticity of demand coefficient measures:
buyer responsiveness to price changes.
A perfectly inelastic demand schedule:
can be represented by a line parallel to the vertical axis.
The demand for a product is inelastic with respect to price if:
consumers are largely unresponsive to a per unit price change.
The state legislature has cut Gigantic State University's appropriations. GSU's Board of Regents decides to increase tuition and fees to compensate for the loss of revenue. The board is assuming that the:
demand for education at GSU is inelastic.
For a linear demand curve:
demand is elastic at high prices.
Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business. Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time. We can expect that each successive week:
demand will become less price elastic.
the demand for Coca-Cola to be more price elastic or inelastic than the demand for soft drinks in general.
elastic
A linear demand curve has a constant elasticity over the full range of the curve. true or false?
false
If the coefficient of income elasticity of demand is positive, the product is an inferior good. true or false
false
If the elasticity coefficient of supply is 0.7, supply is elastic.
false
We would expect the coefficient of cross elasticity of demand for DVD players and DVDs to be positive. true or false
false
A perfectly inelastic demand curve:
graphs as a line parallel to the vertical axis.
If demand for a product is elastic, the value of the price elasticity coefficient is:
greater than 1
The larger the positive cross elasticity coefficient of demand between products X and Y, the:
greater their substitutability.
the supply of higher education in the United States is:
highly price inelastic
If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will:
increase the amount demanded by more than 10 percent.
If the University Chamber Music Society decides to raise ticket prices to provide more funds to finance concerts, the Society is assuming that the demand for tickets is:
inelastic
The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. Therefore, demand for X in this price range:
is elastic.
The supply of product X is perfectly inelastic if the price of X rises by:
10 percent and quantity supplied stays the same.
The price elasticity of demand for widgets is 0.80. Assuming no change in the demand curve for widgets, a 16 percent increase in sales implies a:
20 percent reduction in price.
Which type of goods is most adversely affected by recessions?
Goods for which the income elasticity coefficient is relatively high and positive.
Which of the following generalizations is not correct?
The price elasticity of demand is greater for necessities than it is for luxuries.
We would expect the cross elasticity of demand between dress shirts and ties to be:
negative, indicating complementary goods.
The supply of known Monet paintings is:
perfectly inelastic.
Assume that a 6 percent increase in income in the economy produces a 3 percent increase in the quantity demanded of good X. The coefficient of income elasticity of demand is:
positive and therefore X is a normal good.
Studies show that the demand for gasoline is:
price inelastic in both the short and long run.
The formula for cross elasticity of demand is percentage change in:
quantity demanded of X/percentage change in price of Y.
Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired. GSU is assuming that the demand for education at GSU is:
relatively inelastic.
The demand for a necessity whose cost is a small portion of one's total income is:
relatively price inelastic.