Econ 1000 Que &Answer (Verified answers)
What does the supply curve tell us about the producer's minimum supply price?
A supply curve _______. Answer - Tells us the lowest price at which someone is willing to sell.
price elasticity of demand Answer - is a units-free measure of the responsi...
What does the supply curve tell us about the producer's minimum supply price?
A supply curve _______. Answer - Tells us the lowest price at which someone is willing to sell.
price elasticity of demand Answer - is a units-free measure of the responsiveness of the quantity
demanded of a good to a change in its price when all other influences on buying plans remain the same.
Percentage change in quantity demanded
---------------
Percentage change in price.
Which of the following is an example of price elasticity of demand? Answer - When the price of
bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded
decreased by 2 percent.
Which of the following statements describes a perfectly inelastic demand? Answer - Shoppers does not
find any change in the number of people buying chlorthalidone after a 7 percent rise in its price.
The demand for plums is unit elastic if _____. Answer - a 5 percent rise in the price of plums results in a
5 percent decrease in the quantity of plums demanded
Which of the following statements describe an inelastic demand? Answer - Megan did not buy too
many hockey tickets even though their price dropped by 10 percent.
Which of the following statements is an example of perfectly elastic demand? Answer - Sherry is
overwhelmed with buyers of her peaches when she lowers their price by a penny a kilogram compared
to other sellers in the farmers' market.
Which of the following statements describes an elastic demand? Answer - Mary's quantity demanded
of milk decreased by 8 percent when the price of milk rose by 5 percent.
,When the price of tomatoes rises from $3 per kilogram to $4 per kilogram, the quantity of tomatoes sold
decreases from 15 kilograms to 10 kilograms. Total revenue _____, and using the total revenue test, we
can determine that the demand for tomatoes is _____ . Answer - decreases from $45 to $40; elastic
Why do we need a units-free measure of the responsiveness of the quantity demanded of a good or
service to a change in its price?
Because elasticity is a units-free measure of the responsiveness of the quantity demanded of a good or
service to a change in its price, _______. Answer - we can compare the responsiveness of the same
good when quantity is measured in different units, or we can compare across different goods
Define the price elasticity of demand and show how it is calculated.
The price elasticity of demand is a units-free measure of the responsiveness of ______. Answer - the
quantity demanded of a good to a change in its price when all other influences on buying plans remain
the same
The price elasticity of demand is calculated by dividing the _______ by the _______ . Answer -
percentage change in the quantity demanded; percentage change in the price
The fewer the substitutes for a good or service, the more ______ is the demand for it.
The smaller the proportion of income spent on a good, the more ______ is the demand for it. Answer -
inelastic; inelastic
The shorter the time that has elapsed since a price change, the more _______. Answer - inelastic is
demand
Why is the demand for a luxury generally more elastic (or less inelastic) than the demand for a
necessity?
Demand for a luxury is more ______ than demand for a necessity, because a luxury has ______
substitutes. Answer - elastic; more
, The total revenue test is a method of estimating the price elasticity of demand by observing the ______
that results from ______, when all other influences on the quantity sold remain the same. Answer -
change in total revenue; a change in the price
Demand is elastic if a price
cut
increases total revenue.
Demand is inelastic if a price
rise
increases total revenue.
Demand is unit elastic if a price
cut or rise
leaves total revenue unchanged. Answer - look
inelastic demand Answer - demand in which changes in price have little or no effect on the amount
demanded
The price elasticity of demand is less than 1
When the price elasticity of demand is greater than 1, demand is elastic.
When the price elasticity of demand is less than 1, demand is inelastic.
And when the price elasticity of demand equals 1, demand is unit elastic. Answer -
The figure shows the demand curve for pens.
Along a straight-line demand curve, demand is unit elastic at the midpoint.
In the figure, demand is unit elastic when the price is $6 a pen.
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