Chapter 5 Elasticity true or false

Question 1

The demand for cell phones is more pricey elastic then the demand for iPhones

Answer 1

False, iPhone has a number of substitutes such as BlackBerry, LG, and Samsung

Question 2

A normal good is one for which the income elasticity is greater than one

Answer 2

False, a normal good has an income elasticity greater than zero

Question 3

A good perceived by the consumer to be a necessity will tend to have an elastic demand

Answer 3

False, necessities tend to have inelastic demand curves

Question 4

For a good with the price elasticity of demand of 0.8, an increased in price will cause total consumer spending on that good to rise

Answer 4

True

Question 5

The supply of beef for this week is likely to be more price inelastic then the supply of beef over three years

Answer 5

True

Question 6

If dennis allocates $24 as his monthly expenditure on beer, and he spends no more and no less, regardless of price, then his demand for beer is Unit elastic.

Answer 6

True

Question 7

Generally speaking, good sitter considered necessities tend to have inelastic demands

Answer 7

True

Question 8

The supply of land overlooking the Niagara River is highly price elastic

Answer 8

False, the supply of land overlooking the Niagara River is highly inelastic because it is almost impossible to produce more of it

Question 9

If price elasticity of demand is zero, then any price change will also have zero effect on total revenue.

Answer 9

False, if elasticity is less then one (including zero) then total revenue will move in the same direction as price.

If elasticity is zero, then quantity does not change, and total revenue will change in proportion to the change in price

Question 10

If the quantity demanded of the product is sensitive to a change in it’s price, the demand for the product is said to be price elastic

Answer 10

True