Economics Chapter 5

increase total revenue of textbook sellers.

If the demand for textbooks is inelastic, then an increase in the price of textbooks will A. increase total revenue of textbook sellers. B. decrease total revenue of textbook sellers. C. not change total revenue of textbook sellers. D. There is not enough information to answer this question.

supply curve is horizontal.

If the price elasticity of supply for a good is equal to infinity, then the A. supply curve is vertical. B. supply curve is horizontal. C. supply curve also has a slope equal to infinity. D. quantity supplied is constant regardless of the price.

Elastic An increase in price greatly reduces the quantity demanded for a luxury .

Is demand for luxuries elastic/inelastic?

supply

Wha type of elasticity (supply/demand) measures how much the quantity supplied responds to a change in the price?

same

Inelastic Demand: Changes in price and changes in total revenue move in the ____ direction.

lower

Is elasticity lower/higher for Broadly defined goods?

oppostite

Elastic Demand: Changes in price and changes in total revenue move in the _____ direction.

a measure of how much buyers and sellers respond to changes in market conditions.

Elasticity is A. a measure of how much buyers and sellers respond to changes in market conditions. B. the study of how the allocation of resources affects economic well-being. C. the maximum amount that a buyer will pay for a good. D. the value of everything a seller must give up to produce a good.

lower

Elasticity is _____ for Broadly defined goods. ex. running shoes vs. Nike running shoes

...

Elasticity is higher in the long-run than in the short run!!!!!

close substitutes

Elasticity is higher when __________ are available.

elastic

Holding all other forces constant, if increasing the price of a good leads to a decrease in total revenue, then the demand for the good must be A. unit elastic. B. inelastic. C. elastic. D. None of the above is correct because a price increase always leads to an increase in total revenue.

unit elasticity

If demand is EQUAL to on, demand is said to have _____.

will rise.

If demand is price inelastic, then when price rises, total revenue A. will fall. B. will rise. C. will remain unchanged. D. may rise, fall, or remain unchanged. More information is need to determine the change in total revenue with certainty.

inelastic

If elasticity is LESS than one, demand is _____.

perfectly inelastic (vertical)

If elasticity is ZERO, demand is ______.

perfectly elastic (horizontal)

If elasticity is infinite, demand is _____.

elastic

If price elasticity of demand is GREATER that one, demand is ______.

inelastic

If quantity supplied changes little from a change in price, supply is ____.

elastic

If quantity supplied changes substantially from a change in price, supply is ____.

quantity demanded stays the same whenever price changes.

In the case of perfectly inelastic demand, A. the change in quantity demanded equals the change in price. B. the percentage change in quantity demanded equals the percentage change in price. C. infinitely-large changes in quantity demanded result from very small changes in the price. D. quantity demanded stays the same whenever price changes.

Inelastic One can not do without a necessity, so an increase in price has little impact on the quantity demanded

Is demand for necessities elastic/inelastic?

higher

Is the elasticity higher/lower if the demand curve id flatter?

lower

Is the elasticity higher/lower if the demand curve is steeper?

demand for tea is perfectly inelastic.

Ryan says that he would buy one cup of tea every day regardless of the price. If he is telling the truth, Ryan's A. demand for tea is perfectly inelastic. B. price elasticity of demand for tea is 1. C. income elasticity of demand for tea is 0. D. None of the above answers is correct.

The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.

Suppose that two supply curves pass through the same point. One is steep, and the other is flat. Which of the following statements is correct? A. The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve. B. The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve. C. Given two prices with which to calculate the price elasticity of supply, that elasticity would be the same for both curves. D. A decrease in demand will increase total revenue if the steeper supply curve is relevant, while a decrease in demand will decrease total revenue if the flatter supply cure is relevant.

Close Substitutes

The demand for goods is with _________ is more sensitive to changes in price and, thus, more price elastic.

quantity demanded responds to a change in price

The elasticity of demand measures how much a.) quantity demanded responds to a change in price b.) quantity demanded responds to a change in income c.) price responds to a change in demand d.) demand responds to a change in supply

higher

The flatter the demand curve, the higher/lower the elasticity?

greater the responsiveness of quantity demanded to a change in price.

The greater the price elasticity of demand, the A. more likely the product is a necessity. B. smaller the responsiveness of quantity demanded to a change in price. C. greater the percentage change in price over the percentage change in quantity demanded. D. greater the responsiveness of quantity demanded to a change in price.

the extent to which demand increases as additional buyers enter the market.

The price elasticity of demand measures A. buyers' responsiveness to a change in the price of a good. B. the extent to which demand increases as additional buyers enter the market. C. how much more of a good consumers will demand when incomes rise. D. the movement along a supply curve when there is a change in demand.

the quantity supplied responds to changes in the price of the good.

The price elasticity of supply measures how much A. the quantity supplied responds to changes in input prices. B. the quantity supplied responds to changes in the price of the good. C. the price of the good responds to changes in supply. D. sellers respond to changes in technology.

supply is relatively elastic.

When a supply curve is relatively flat, the A. sellers are not at all responsive to a change in price. B. equilibrium price changes substantially when the demand for the good changes. C. supply is relatively elastic. D. supply is relatively inelastic.

long-run

Elasticity is higher in the ______ than in the short-run.

lower both price and total revenues.

Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery will A. raise both price and total revenues. B. lower both price and total revenues. C. raise price and lower total revenues. D. lower price and raise total revenues.

horizontal

The case of perfectly elastic demand is illustrated by a demand curve that is A. vertical. B. horizontal. C. downward-sloping but relatively steep. D. downward-sloping but relatively flat.

inelastic it is!!!!

The steeper the demand curve the more _____.

lower

The steeper the demand curve, the higher/lower the elasticity?

luxury

Elasticity is higher for _______ goods when compared to necessities.

elastic it is!!!!

The flatter the demand curve the more ____.

Total Revenue

_______ is the amount paid by buyers and received by sellers.