Which of the following describes a situation in which demand must be elastic?
a. Total revenue increases by 15 percent when the price of corn dogs rises by 15 percent.
d. Total revenue increases by $15 when the price of corn dogs rises by $15.
c. Total revenue decreases by more than 15 percent when the price of corn dogs rises by 15 percent.
b. Total revenue increases by less than 15 percent when the price of corn dogs rises by 15 percent.
Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicycles is:
b. elastic, and total revenue will increase.
a. inelastic, and total revenue will increase.
c. inelastic, and total revenue will decrease.
d. elastic, and total revenue will decrease.
On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:
c. will decrease total revenue.
d. raises the price elasticity of demand.
b. will increase total revenue.
a. decreases quantity demanded.
The demand for a product is likely to be more elastic:
c. in the short run than in the long run.
d. when more good substitutes for the product are available.
a. the smaller the share of the total budget spent on the product.
b. when more complementary products are available.
Other things constant, the price elasticity of demand for a product will be smaller (more inelastic) if:
c. the population in the market area is large.
b. people spend an insignificant share of their income on the product.
a. people spend a large share of their income on the product.
d. there are many good substitutes for the product.
The demand for a product is likely to be more elastic
b. the lower the price of the good.
a. the shorter the time the consumer has to adjust to price changes.
c. the fewer the number of good substitutes.
d. the less the essential nature of the good.
The demand for gasoline will be most elastic
c. 1 month after the price change.
d. 1 year after the price change.
a. 1 day after the price change.
b. 1 week after the price change.
Price elasticity of demand depends on all of the following except:
d. the availability and closeness of substitutes.
b. the sensitivity of firms' output to changes in the product's price.
a. the amount of time a consumer has to adjust to price changes.
c. the consumer's income.
If the short-run price elasticity of demand for hospital care is 0.27, then the long-run price elasticity is expected to be:
c. less than 0.27.
a. greater than 0.27.
b. perfectly inelastic.
d. equal to 0.27.
The long-run price elasticity of demand is usually larger than the short-run price elasticity of demand because:
d. incomes tend to rise over time.
b. economists take the absolute value of long-run price elasticities but not of short-run elasticities.
c. people have more time to find substitute goods.
a. demand curves tend to become steeper over time.
If the price elasticity of demand for a luxury is 2.6, then the price elasticity of demand for a necessity is expected to be
c. less than 2.6.
d. perfectly elastic.
a. greater than 2.6.
b. equal to 2.6.
The price elasticity of demand coefficient for a good will be greater:
c. in the short-run.
a. if close substitutes exist.
b. if minor complements exist.
d. if a small portion of the budget will be spent on it.
If the price elasticity of demand is elastic, then:
b. consumers are relatively not very responsive to a price increase.
d. there are likely a large number of substitute products available.
a. Ed < 1.
c. an increase in the price will increase total revenue.
Which of the following statements is not true?
c. The availability and price of substitutes affect the elasticity of demand for a good or service.
b. When price elasticity of demand is very high, we say there is brand loyalty.
a. Price elasticity of demand for basic foods is low.
d. When goods have very low prices, the elasticity of demand is usually quite low
Sally recently got a 15 percent raise. She now purchases 7.5 percent more steak dinners. Sally's income elasticity for steak dinners is: （1.d.p）
The sign of the price elasticity coefficient for a normal good will:
b. always be positive.
a. always be negative.
d. be positive if demand is inelastic but negative if demand is elastic.
c. be positive if demand is elastic but negative if demand is inelastic.
A good is classified as inferior if:
d. consumers buy more when income rises.
b. consumers buy less when income rises.
a. consumers buy less when the price rises.
c. consumers buy less when the price falls.
If the cross-elasticity of demand for two goods is positive, this means that the goods are:
d. complements.
c. substitutes.
a. normal goods.
b. inferior goods.
If a 1 percent decrease in the price of product A brings about a 3 percent increase in the sales of product B, then:
d. the demand for these products is inelastic.
a. products A and B are complementary.
b. the cross elasticity of demand between these two products is positive.
c. products A and B are substitutes.
We would expect the cross elasticity between tennis racquets and tennis balls to be:
d. one.
a. negative.
c. zero.
b. positive.
The price of Z has fallen, XED of Z and Y is −1.5; XED of Y and X is 3.0, and XED of Z and X is 0.50. It would make sense that:
d. X and Z are complements; Y and Z are substitutes.
b. Y and X are substitutes; Y is complementary to Z.
c. X and Z are unrelated; Y is complementary to X.
a. Z and X are complements; Y and X are substitutes.
As the period for firms to expand output is lengthened, the elasticity of the market supply curve will:
d. remain the same since time does not affect the elasticity of market supply.
b. increase.
a. approach zero.
c. decrease.
A perfectly elastic supply curve is expressed graphically as a(n):
c. vertical line.
d. horizontal line.
b. upward sloping line or curve.
a. downward sloping line or curve.
In the very short-run period,
b. the price elasticity of demand is very elastic.
d. the price elasticity of supply is very inelastic.
a. the price elasticity of supply is very elastic.
c. the cross elasticity of demand is very inelastic.
Price elasticities of supply are always:
d. greater than one.
c. positive numbers.
b. negative numbers.
a. the same as price elasticities of demand.
In Exhibit 5-6, if promoters lower their ticket price from $30 to $20, then:
c. ticket sales will decrease but total revenue will increase because demand is elastic between $30 and $20.
d. both ticket sales and total revenue will increase because demand is elastic between $30 and $20.
a. ticket sales will increase but total revenue will decrease because demand is inelastic between $30 and $20.
b. both ticket sales and total revenue will increase because demand is inelastic between $30 and $20.
【T/F】We must take absolute value after calculating PED, PES, YED, XED
Yes
NO
When the XED of two products are 0, what does it mean?
They have no relationship
They are substitutes
They are complements
They are inferior goods
XED between good A and B is 4.7 while XED between good A and C is 0.1. Then which one is a more closer substitute of good A?
good B
good C
Different people may have different elasticities towards different products.
Yes
NO
Along a downward sloping demand curve, (PED) elasticity may vary.
Yes
NO