Microeconomics Exam #2 (Ch5-7, 9 Quiz Questions)
the price elasticity of supply measures how much
the quantity supplied responds to changes in the price of the good
when the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about
0.67
Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is
1
if a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about
1.60, and supply is elastic
if the price elasticity of demand for a good is 0.3, then a 20 percent decrease in price results in a
6 percent increase in the quantity demanded
a legal maximum on the price at which a good can be sold is called a price
ceiling
if the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the
demand for the good is said to be inelastic
a consumer's willingness to pay directly measures
how much a buyer values a good
the athletic director of state u suggests that the university should reduce ticket prices to its football games in order to increase both attendance and revenue from ticket sales. economic theory predicts that, for a price elasticity demand this price reduction would
increase attendance and increase revenue
Goods with many close substitutes tend to have
more elastic demands
The price elasticity of demand measures how much
quantity demanded responds to a change in price
when consumers face rising gasoline prices, they typically
reduce their quantity demanded more in the long run than in the short run
A seller is willing to sell a product only if the seller receives a price that is at least as great as the
seller's producer surplus
suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the
supply is more inelastic than the demand