Exam 6: Demand and Elasticity

A demand curve is described as perfectly elastic if

Demand curves often do not remain stationary; they shift because of changes in other variables.

The measure used to determine whether two products are substitutes or complements is called

If the demand curve is vertical, the elasticity is

A line that is perfectly elastic has an elasticity of demand of zero.

Figure 6-7 -In Figure 6-7, which total expenditure curve belongs to a demand curve that is unit elastic throughout?

If a firm increases its prices when the demand is inelastic, then the firm will see

Perfectly inelastic demand curves are vertical.

The elasticity of a demand curve at any point can be ascertained by its steepness.

As one moves down a straight-line demand curve, the elasticity increases.

Buyers' expenditures and sellers' revenues are always identical.

The market demand curve shows how the quantity demanded of a product, during a specified time period, changes as the price of that product changes.

If the price of gasoline rises by 20 percent and consumption of gasoline falls 5 percent,

The relationship between a change in consumer income and a resulting change in demand for a good is

After a number of acquisitions, Air American controls 75 percent of the U.S.market.It has been charged with "monopolizing" the U.S.air markets by the Justice Department.In its defense, the airline would want to introduce evidence that

Knowing the value of the cross elasticity of demand allows us to distinguish between inferior goods and normal goods.

Arrange the following goods from least to most elastic, explaining your ordering: gasoline, Exxon gas, Exxon gas at a particular gas station.

If demand is elastic, a rise in price will decrease total expenditure.

Figure 6-3 -Along the inelastic portion of a demand curve, the

Price elasticity of demand can be written as percentage change in Q divided by percentage change in P.