Chapter 6-Elasticities Flashcards
The price elasticity of demand measures the responsiveness of quantity _____ to a change in price.
demanded
The price elasticity of demand is defined as the percentage change in _____ divided by the percentage change in ______.
quantity demanded; price
If the price elasticity of demand is elastic, it means the quantity demanded changes by a relatively _____ amount than the price change.
larger
If the price elasticity of demand is inelastic, it means the quantity demanded changes by a relatively _____amount than the price change.
smaller
A demand curve or a portion of a demand curve can be relatively _____, _____, or relatively _____.
elastic; unit elastic; inelastic
For the most part, the price elasticity of demand depends on the availability of _____, the _____ spent on the good, and the amount of _____ people have to adapt to a price change.
close substitute; proportion of income; time
The elasticity of demand for a Ford automobile would likely be _____ elastic than the demand for automobiles, because there are more and better substitutes for a certain type of car than for a car itself.
more
The smaller the proportion of income spent on a good, the _____ its elasticity of demand.
lower
The more time that people have to adapt to a new price change, the _____ the elasticity of demand. The more time that passes, the more time consumers have to find or develop suitable _____ and to plan and implement changes in their patterns of consumptions.
greater; substitutes
When demand is price elastic, total revenue will _____ as the price declines because the percentage increase in the _____ is greater than the percentage reduction in price.
rise; quantity demanded
When demand is price inelastic, total revenue will _____ as the price declines because the percentage increase in the _____ is less than the percentage reduction in price.
fall; quantity demanded
When the price falls on the _____ half of the straight-line demand curve, demand is relatively _____. When the price falls on the lower half of the straight-line demand curve, demand is relatively _____.
upper; elastic; inelastic
The cross-price elasticity of demand is defined as the percentage change in the _____ of good A divided by the percentage change in _____ of good B.
demand; price
The income elasticity of demand is defined as the percentage change in the _____ by the percentage change in _____.
demand; income
The price elasticity of supply measures the sensitivity of the quantity _____ to changes in the price of the good.
supplied
The price elasticity of supply is defined as the percentage change in _____ divided by the percentage change in _____.
quantity supplied; price
Goods with a supply elasticity that is greater than 1 are called relatively _____ in supply.
elastic
When supply is inelastic, a 1 percent change in the price of a good will induce a _____ 1 percent change in the quantity supplied.
less than
Time is usually critical in supply elasticities because it is _____ costly for sellers to bring forth and release products in a shorter period of time.
more
The relative _____ determines the distribution of the tax burden for a good.
elasticity of supply and demand
If demand is relatively _____ elastic than supply in the relevant region, the largest portion of a tax is paid by the producer.
more
The measure of the responsiveness of quantity demanded to a change in price.
price elasticity of demand
When the quantity demanded is greater than the percentage change in price.
elastic
When the quantity demanded is less than the percentage change in price.
inelastic
Demand with a price elasticity of 1; the percentage change in quantity demanded is equal to the percentage change in price.
unit elastic demand
The amount sellers receive for a good or service, calculated as the product price times the quantity sold.
total revenue
The measure of the impact that a price change of one good will have on the demand of another good.
cross-price elasticity of demand
The percentage change in demand divided by the percentage change in consumers income.
income elasticity of demand
The measure of the sensitivity of the quantity supplied to changes in price of a good.
price elasticity of supply
