Exam 4: Elasticity: The Responsiveness of Demand and Supply

The demand for all carbonated beverages is likely to be ________ the demand for Pepsi.

When there are few substitutes available for a good, demand tends to be relatively inelastic.

The most important determinant of the price elasticity of demand for a good is

-Refer to Figure 4-1. A perfectly inelastic demand curve is shown in

If the demand for a steak is unit-elastic, then

If a 5 per cent increase in income leads to a 10 per cent increase in quantity demanded for airline travel, then airline travel is

The price elasticity of demand is equal to

If demand is inelastic, the absolute value of the price elasticity coefficient is greater than one.

The larger the share of a good in a consumer's budget, holding everything else constant, the

If demand is perfectly inelastic, the absolute value of the price elasticity of demand is

If demand for a product is perfectly inelastic, a change in price will not change total revenue.

Suppose that the price of a money clip increases from $0.75 to $0.90 and quantity supplied rises from 8000 units to units. Use the midpoint formula to calculate the price elasticity of supply.

Consider the following pairs of items: a. shampoo and conditioner B. iPhones and earbuds C. a laptop computer and a desktop computer D. beef and pork E. air-travel and weed killer Which of the pairs listed will have a positive cross-price elasticity?

In recent years, the prices of new domestically produced cars have been falling. Suppose consumers respond by reducing their demand for used cars and mass transport services such as bus travel. This information suggests that the cross-price elasticity between new cars and used cars, and the cross-price elasticity between new cars and bus travel are negative.

A demand curve which is ________ represents perfectly inelastic demand, and a demand curve which is ________ represents inelastic demand.

If the price elasticity of demand is unit-elastic, a 10 per cent increase in price will result in a 10 per cent increase in revenue.

-Refer to Figure 4-1. The demand curve on which elasticity changes at every point is given in

If a firm raised its price and discovered that its total revenue fell, then the demand for its product is

If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because

The demand for most farm products is relatively inelastic. All else constant, what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?