Microeconomics Chapter 6
If two goods are complementary, it means that when the price of one good increases, the demand for the other rises. (T/F)
False
Most goods are normal goods, and their demand shifts to the left when income rises. (T/F)
False
The price elasticity for necessities will be greater than 1. (T/F)
False
Smart phones and apps are complementary goods. The cross-price elasticity of demand between smart phones and apps is expected to be
Negative
Oil and alternative sources of energy such as wind and solar are...
Substitute Goods
To find the percentage change in price,
The change in price is divided by the average price.
The basic formula for price elasticity of demand is...
The percentage change in quantity demanded divided by the percentage change in price
The price elasticity of supply will always be a negative number. (T/F)
This Statement is True
The cross-price elasticity sign for substitute goods is negative. (T/F)
This statement is False
The formula for the elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price. (T/F)
This statement is true
The World View titled "Rebounding Oil Price Spurs More Rigs" related to oil prices and oil rigs suggests that...
as the price of oil increases, there is an increase in oil rigs and the amount of quantity supplied, supply therefore is elastic
Higher prices will increase total revenue if the...
demand is inelastic
If the price elasticity of demand is equal to 2, the good has _____ demand.
elastic
When demand is elastic, the absolute number for price elasticity will be
greater than 1
If a good is normal, its...
income elasticity of demand is positive.
The total revenue effect of a movement along a demand curve can best be predicted using the...
price elasticity of demand
If peanut butter and jelly are complementary goods, an increase in the price of peanut butter will, ceteris paribus,
reduce the demand for jelly
Total revenue is equal to...
the income from sales
When demand is inelastic...
the percentage change in price is greater than the percentage change in quantity demanded
Demand is elastic if the consumer has only a few substitutes to choose from. (T/F)
this statement is false
During a recession when incomes typically drop, the sales of autos fall, and the best measure of this is to use cross-price elasticity. (T/F)
this statement is false
Along a linear or straight-line demand curve, demand is more elastic at higher prices. (T/F)
this statement is true
If demand is inelastic, a reduction in price will lead to a drop in total revenue. (T/F)
this statement is true
What product(s) will have an elastic demand?
travel souvenirs
