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

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

If a good is considered to be an inferior good, its income elasticity of demand is

Other things being equal, the demand for a product is less elastic if

When price elasticity of demand for a good equals 0, it is said to be perfectly inelastic.

Which of the following is a characteristic of an item with elastic demand?

If the price elasticity of demand is equal to 4, a 1 percent increase in price will cause the quantity demanded to ____ by ____ percent.

If the price elasticity of demand for apples is higher than the price elasticity of demand for oranges, then a given percentage increase in the price of apples and oranges will result in more percentage decrease in the quantity demanded for apples than for oranges.

For demand to be unit elastic,

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

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.

If supply is perfectly inelastic, then the price elasticity of supply is infinity.

The price elasticity of demand is negative because the demand curve slopes downward.

Indicate whether the percentage change in quantity demanded or percentage change in price is greater and whether demand is considered sensitive or insensitive for each of the following categories: elastic, inelastic, unit elastic.

The cross-price elasticity of demand between two goods measures the percentage change in the demand for one good for a given percentage change in the price of another good.

For one to accurately say that the demand for good X is more elastic than the demand for good Y, the price elasticity of demand for good X must be greater than the price elasticity of demand for good Y.

The government can issue ration coupons to deal with problems resulting from a price floor.

Which of the following formulas is a correct expression of the price elasticity of supply?

Calculate the price elasticity of demand if a .8 percent change in the price of a product results in a .25 percent change in quantity demanded, and indicate whether demand is elastic, inelastic, or unit elastic.

All of the following are forms or examples of price control except

If the price elasticity of demand for computers is greater than 1, then an increase in computer prices will