Economics Chapter 19

Question 0

Price elasticity of demand is calculated in terms of ———– changes in quantity demanded and in price. Thus, it is exposed as a unit less, dimensionless number that is ——— of units in measurement.

Answer 0

Percentage…. Independent

Question 1

The price elasticity of demand is equal to the percentage change in ———- ———- divided by the percent change in ————.

Answer 1

Quantity demanded …….price

Question 2

The price elasticity of demand always———-‘ because an increase in price will lead to a ———- in quantity demanded and a decrease in price will lead to an ——- in quantity demanded. By convention, we ignore the negative sign in discussions of the price elasticity of demand.

Answer 2

Negative… Decrease.. Increase

Question 3

One extreme elasticity occurs when a demand curve is vertical. It has a ——– price elasticity of demand. It is completely ———. Another extreme elasticity occurs when a demand curve is horizontal. It has completely ——-demand. It’s price elasticity is ———–.

Answer 3

Zero….inelastic… Elastic……infinite

Question 4

Price elasticity of demand is related to total ——

Answer 4

Revenues

Question 5

When demand is elastic, the change in price elicits a change in total revenues in the ——- direction from the price change.

Answer 5

Opposite

Question 6

When demand is unit-elastic, a change in price elicits —— change in total revenue( or total consumer expenditures).

Answer 6

Zero

Question 7

When demand is elastic, a change in price elicits a change in total revenues ( and in consumer expenditures) in the —– direction as the price change.

Answer 7

Same

Question 8

Some determinants of price elasticity of demand are the existence, number, and quality of ——-; the ——- of the total budget spent on the good in question; and the length of time allowed for ——- to a change in prices.

Answer 8

Substitutes..share…adjustments

Question 9

—— price elasticity of demand measures the responsiveness of the amount of one good demanded to another’s price changes. For substitutes, the cross price elasticity of demand is ——–. For complements it is ——–.

Answer 9

Cross… Positive…negative

Question 10

Income of elasticity of demand tells you by what percentage the amount of a good —— will change for a particular percentage change in ——–

Answer 10

Demanded…. Income

Question 11

Price elasticity of supply is calculated by dividing the percentage change in the —— ——— by the percentage change in ——–

Answer 11

Quantity supplied… Price

Question 12

Usually price elasticities of supply are ——— higher prices yield ——– quantities supplied

Answer 12

Positive… Greater

Question 13

Long-run supply curves are —– elastic than short run supply curves because the —– the time allowed, the more resources can flow into or out of an industry when price changes

Answer 13

More…. Longer