Exam 5: Elasticity: Demand and Supply

The figure given below shows the demand curves for five products: A,B,C,D,andE. Figure 5.1 - In Figure 5-1,which demand curve is most likely to represent demand for insulin by diabetics?

The coefficient of the price elasticity of demand is always negative.

Cross-price elasticity is represented by the formula DQ/DP ´ P/Q; where P and DP represent the price and change in price of a related good respectively.

Price elasticity of demand is the sole determinant of profit for a firm.

A horizontal demand curve shows that demand for the good is _____.

Everything else held constant,the greater the number of close substitutes there are for a good,the smaller the price elasticity of demand for that good.

If the price elasticity of supply is zero,the supply curve is a horizontal line parallel to the quantity axis.

Suppose 50 loaves of bread are demanded at a particular price.If that price rises by 2 percent,the quantity demanded decreases to 49.5 loaves of bread.This implies:

If a product has an inelastic demand,then:

The table below shows the quantities of automobiles,margarine,and coffee purchased by Ted at different levels of income. Table 5.2 -Based on the information given in Table 5.2,margarine is:

If demand is unit-elastic,a 25 percent increase in price will result in:

Price elasticity of demand measured over a range of prices and quantities along the demand curve is _____.

The price elasticity of demand is the ratio of the change in quantity demanded to the change in price.

If butter has an income elasticity equal to 0.75,then butter is an inferior good.

If demand is unit-elastic,then a $5 decrease in price will lead to an increase in quantity demanded by 5 units.

Assume that due to unfavorable conditions in a prime honey-producing area,the price of honey increases by 50 percent.The quantity consumed of herbal tea declines immediately by 25 percent.Everything else held constant,the:

The table below shows the quantities of automobiles,margarine,and coffee purchased by Ted at different levels of income. Table 5.2 - Based on the information given in Table 5.2,coffee would be considered:

Which of the following is true of price elasticity of demand?

When income elasticity of demand is a negative number,one can correctly conclude that:

Since the slope of a downward sloping demand curve is constant,the price elasticity of demand does not change when moving along this line.