Chapter 5

Question 1

Elasticity of Demand

Answer 1

(1/slope) * (P/Q)

Question 2

slope =

Answer 2

-b

Question 3

Linear Demand

Answer 3

p = -bQ+a

Question 4

E = infinite

Answer 4

Perfectly Elastic

Question 5

1

Answer 5

Elastic

Question 6

E = 1

Answer 6

Unitary Elastic

Question 7

0

Answer 7

inelastic

Question 8

E = 0

Answer 8

Perfectly inelastic

Question 9

Horizontal line elasticity

Answer 9

Slope = Infinity
E = 0
perfectly inelsatic

Question 10

Vertical line elasticity

Answer 10

Slope= 0
E = infinity
perfectly elastic

Question 11

Demand Curve steep, Ed

Answer 11

inelastic, not sensitive

Question 12

Demand Curve, Ed > 1

Answer 12

elastic, sensitive

Question 13

Ed > 1, Increase P

Answer 13

Decrease in Q, Decrease Revenue

Question 14

Total revenue

Ed > 1, Decrease P

Answer 14

Increase in Q, Increase Revenue

Question 15

Total revenue

Ed

Answer 15

Decrease in Q, Increase Revenue

Question 16

Total revenue

Ed

Answer 16

Increase in Q, Decrease Revanue

Question 17

Total revenue

Ed = 1

Answer 17

Total revenue is constant

Question 18

TR = X*Y

Answer 18

x = price
y = supply

Question 19

Max Revanue

F’’(Q)

Answer 19

MAX

Question 20

Max Revanue graph equation

Answer 20

a^2/4b

Question 21

z = x*y

Answer 21

%ChangeZ ~ %ChangeX + %ChangeY

Question 22

z = x/y

Answer 22

%ChangeZ ~ %ChangeX - %ChangeY

Question 23

TR = P*Q

Answer 23

%ChangeTR = %ChangeP + %ChangeQ

Question 24

More Substitutes

Answer 24

Ed Higher

Question 25

Less Substitutes

Answer 25

Ed Lower

Question 26

Budget share Large Portion

Answer 26

Ed Higher

Question 27

Budget share small Portion

Answer 27

Ed Lower

Question 28

Short-run

Answer 28

Ed is lower

Question 29

Long run

Answer 29

Ed is Higher

Question 30

Sunkist Orange

Answer 30

Ed higher

Question 31

Oranges

Answer 31

Less substitutes = Ed lower

Question 32

Income Elasticity - More Income

Answer 32

Increase demand for Normal good

Question 33

Income Elasticity - Less Income

Answer 33

Less demand for inferior Good

Question 34

Income Elasticity of Demand

Ei > 1

Answer 34

Luxury

Question 35

Income Elasticity of Demand

0

Answer 35

neccesity

Question 36

Cross-Price Elasticity of Demand

Answer 36

%ChangeX/%ChangeY

Question 37

Py increases -> Qdy decreases -> Qdx shift right

Answer 37

x & y == subs

Question 38

Py increases -> Qdx decreases -> Qdx shift left

Answer 38

x & y == complements

Question 39

Ed > 0

Answer 39

Substitutes

Question 40

Ed

Answer 40

Complements

Question 41

Price Elasticty of Supply

Answer 41

%ChangeQ/%ChangeP

Question 42

Price Elasticty of Supply equation

Answer 42

P = a+bQ

Question 43

a > 0

Answer 43

Es > 1, decrease as Q increased, Elastic

Question 44

a = 0

Answer 44

Es = 1, Unitary Elastic

Question 45

a = 0

Answer 45

Es

Question 46

Vertical Supply

Answer 46

Es = 0

Question 47

Horizontal Supply

Answer 47

Es = Infinity

Question 48

Elastic Supply - More alternatives

Answer 48

Es Higher

Question 49

Elastic Supply - Less alternatives

Answer 49

Es lower

Question 50

Elastic Supply - More inputs

Answer 50

Es Higher

Question 51

Elastic Supply - Less inputs

Answer 51

Es lower

Question 52

Elastic Supply - More time

Answer 52

Es lower

Question 53

Elastic Supply - Less time

Answer 53

Es Higher

Question 54

Elastic Supply - More extra capacity

Answer 54

Es Higher

Question 55

Elastic Supply - Less extra capacity

Answer 55

Es lower

Question 56

Tax Burden - Ed > Es

Answer 56

Producers bear more tax burden

Question 57

Tax Burden - Ed

Answer 57

Consumers bear more tax burden

Question 58

Tax Burden - Ed = 0

Answer 58

Producers bear 100% tax burden

Question 59

Tax Burden - Es = 0

Answer 59

Consumers bear 100% tax burden