chapter 6

Question 1

consumers responsiveness to a price change is measure by a product’s -price elasticity of demand-

Answer 1

a measure of the responsiveness of buyers to a change in the price of a product or resource.

Question 2

we know from the downward sloping demand curve that price and quantity demanded are inversely related; thus price elasticity coefficient of demand Ed will always be a_____ number

Answer 2

negative

Question 3

elastic

Answer 3

Product or resource demand whose price elasticity of demand is greater than 1, sensitive to price change

Question 4

inelastic

Answer 4

less than one, insensitive to price change

Question 5

unit elasticity

Answer 5

equal to one

Question 6

perfectly inelastic

Answer 6

change in price results in no change in quantity demanded

Question 7

perfectly elastic

Answer 7

small price reduction causes buyers to increase they purchases from zero to all they can obtain

Question 8

total revenue

Answer 8

the Toal amount a seller receives from the sale of a product in a particular time period

TR = P XQ

Question 9

if TR moves opposite of price change demand is?

Answer 9

elastice

Question 10

if TR moves in same direction of price change demand is?

Answer 10

inelastic

Question 11

if TR doesn’t change when price changes demand is

Answer 11

unitary

Question 12

substitutability in elasticity

Answer 12

the more substitute goods that are available, the greater the price elasticity of demand, various candy bars are generally suitable for one another making it highly elastic

Question 13

proportion of income in elasticity

Answer 13

price elasticity for low-priced items tends to be low

price elasticity for expensive items tend to be high

Question 14

government puts taxes on what items

Answer 14

inelastic items

Question 15

quantity supplied is responsive to price change

Answer 15

elastic

Question 16

quantity supplied is insensitive to price change

Answer 16

inelastic

Question 17

price elasticity of supply

Answer 17

a measure of the responsiveness of producers to a change in the price of a product or resource.

Question 18

immediate market period

Answer 18

The length of time during which the producers of a product are unable to change the quantity supplied in response to a change in price and in which there is a perfectly inelastic supply.

ex: farmer will sell truckload of tomatoes whether price is high or low because he can’t grow tomatoes overnight and they go bad

Question 19

short run

Answer 19

a period of time in which producers are able to change the quantities of some but not all of the resources they employ; a period in which some resources (usually plant) are fixed and some are variable.

Question 20

long run

Answer 20

a period of time long enough to enable producers of a product to change the quantities of all the resources they employ, so that all resources and costs are variable and no resources or costs are fixed.

Question 21

supply shows a_____ or_____ relationship between price and amount supplied

Answer 21

postive

Question 22

supply of gold

Answer 22

inelastic

Question 23

cross elasticity of demand

Answer 23

measures the sensitivity of consumer purchases of one product to a change in the price of some other product

Question 24

income elasticity of demand

Answer 24

consumer respond to a change I their incomes by buying more or less of a particular good

Question 25

normal goods

Answer 25

income-elascity positive

Question 26

inferior goods

Answer 26

income elasticity negative