Exam 20: Elasticity

In the article on SUV sales

If income rises by 10 percent and the quantity sold of a particular vehicle falls by 7 percent,then this particular type of vehicle is

The demand will be _______________ if the consumer has _________ substitute goods to choose from

Carter has budgeted $40 per month for candy bars.No matter how the price of candy bars changes,he spends exactly $40 per month.Carter's price elasticity of demand for candy bars must

If the elasticity number (E)is less than 1,a price increase will cause total revenue to fall.

Higher prices will increase total revenue if

Supply is very inelastic if the quantity supplied cannot respond quickly to an increase in price.

If the elasticity of demand is 3,then a 10 percent increase in price will cause quantity demanded to fall by 3 percent.

Technically the elasticity number is negative because

If the price of a good rises by 10 percent and quantity demanded falls by 20 percent,we can predict that

If incomes fall by 5 percent and the quantity demanded for new cars falls by 10 percent,

The price elasticity of demand is equal to

When income falls,the quantity demanded for inferior goods

- Refer to Figure 20.2.Suppose the areas 0P₁AB and 0P₂CD are equal.We can conclude that the price elasticity of demand between point A and point C is

Which of the following is not a determinant of the price elasticity of demand?

If two goods are complementary goods,then

The total revenue effect of a movement along a demand curve can best be predicted using the

Which of the following is the best measure of the effects of a recession?

To reduce our dependence on foreign oil,policy makers must realize that the cross-price elasticity sign for gasoline and fossil fuel-burning cars is negative.

Explain why it is so important for a business to understand the concept of price elasticity and be able to measure this for its products.