Quiz Flashcards
If the supply curve for housing is perfectly inelastic then a reduction in demand will cause the equilibrium price to?
Fall in the equilibrium quantity to stay the same
If the demand curve is perfectly elastic, then an increase in supply will?
Increase the quantity exchange, but result in no change in price
If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction and supply will cause the equilibrium price to?
Rise in the equilibrium, quantity to stay the same
A 10% decrease in the price of potato chips lead to a 30% increase in the quantity of soda it appears that?
Cross price elasticity of domain for soda is -3
The elasticity of demand is defined as percentage change in quantity demanded divided by the percentage change in?
Price
Billy Bob’s barbershop knows that a 5% increase in the price of their haircuts result in a 15% decrease in the number of haircuts purchase what is the elasticity of demand and facing Billy Bob’s barbershop?
3.0
Demand 5
———- ——
Price 15
A perfect elastic supply curve is
Horizontal
Taxes on goods with____ demand curves will tend to raise more tax revenue for the government than taxes on goods with_____ demand curves
inelastic; elastic
What is the revenue of a product that is $5 and sold 100 units
$500
The longer the time period considered the more the elasticity of supply tends to
Increase
What is the total revenue if a product cost $5 and sold 40 units
$200
If this is supply curve for aspirin is perfectly elastic than a reduction in demand will cost equilibrium price to
Stay the same in the equilibrium quantity to fall
A 10% increase in income lease to a 50% decrease in the quantity of macaroni and cheese demanded but no change in the price of macaroni and cheese from this information we can assume
Macaroni is inferior good in price elasticity of supply is infinite
Demand is said to be____ When the quantity demanded is very responsive to changes in price
Elastic
If the supply card for a product is vertical, then elasticity is
Equal to zero
The price elasticity of demand measures the
Responsiveness of quantity demanded to a change in price
Demand is said to be_____ when the quantity demanded is not very responsive to changes in price
Inelastic
When demand is inelastic
Consumers are not very responsive to changes in price
The elasticity of supply is defined as___ change in quantity supplied divided by the___ change in price
Percentage; percentage
Price elasticity of demand is defined as
The percent change of quantity demanded divided by the percent changing price
Formula for price elasticity of demand or supply
Percent change in quantity: New value - Old
————————— = quantity
Old value
Percent change in price:
New price - old
——————— = price
Old price
Quantity
————- = ANSWER
Price
