Exam 4: Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

The price elasticity of supply is a unit-free measure and uses percentage changes in quantity supplied and price to measure how sensitive supply is to a change in price.

Good X has a high price elasticity of demand; it is most likely that

If a household's demand for bread decreases as its income increases, then its income elasticity of demand for bread is

Price elasticity of supply is 1 minus the price elasticity of demand.

Minimum wage is a price floor because employers are prohibited from paying workers at a wage rate lower than a certain level. Some occupations, such as wait staff in restaurants, are exempt from the minimum-wage law. What is the argument against a price floor for these occupations?

If the percentage change in quantity demanded is greater than the percentage change in the price for a good, then the demand for the good is elastic.

To say that gasoline has a low price elasticity of demand is to say the quantity demanded of gasoline

Why isn't the slope of a demand curve used to measure the sensitivity of demand to a price change?

The elasticity of demand is lower for European vehicles than for U.S. vehicles. Why do auto dealers offer substantially fewer discounts for European vehicles than for U.S. vehicles?

When demand shifts, knowing supply elasticity can help us anticipate how big the changes in price and quantity might be.

If the price of a product increases by 10 percent and the quantity demanded decreases by 15 percent, then the

If the demand for bananas has a high price elasticity, then a 5 percent decrease in the price of bananas will result in

If a consultant to a major league baseball team owner suggests that ticket prices be raised in order to increase revenue, the consultant must believe that the price elasticity of demand for baseball tickets is

If the price elasticity of demand is equal to 4, a 1 percent increase in the price will cause quantity demanded to increase from 100 to 104 units.

The measurement for the price elasticity of demand is

Explain why a 10 percent tax would be more destructive in an industry where the demand for the product is highly price elastic as opposed to another industry where product demand is price inelastic.

If demand is elastic, the price elasticity of demand is between 0 and 1.

When price changes, the effect on quantity demanded is larger as time passes at least partly because

If a household increases its consumption of a good by 10 percent when its income increases by 5 percent, then the good is

The concept that explains to what degree price changes when there is a shift in demand, other things being equal, is