Test 3 Flashcards
If the percentage change in the quantity demanded of a good is greater than the percentage change in price,
price elasticity of demand is:
elastic.
Suppose the president of a college argues that a 25 percent tuition increase will raise revenues for the college.
It can be concluded that the president thinks that demand to attend this college is:
inelastic.
If a 10 percent cut in price causes a 15 percent increase in sales, then:
demand is price elastic in this range.
If the price elasticity of demand for a product measures .45,
this good is demand price inelastic.
An economist estimates that .67 is the price elasticity of demand for disposable diapers. This suggests that
disposable diaper producers could:
raise the price of disposable diapers to raise more revenue.
It is Valentine’s Day and Jason is desperately looking all over town for a dozen roses to give to Judy. Most
likely, Jason’s price elasticity of demand is:
less than one.
One of the reasons that price elasticities of demand are always stated as positive numbers is because:
price elasticities are always negative, so we ignore the sign.
If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, the price
elasticity of demand over this range of the demand curve is:
price elastic.
A good is classified as inferior if:
consumers buy less when income rises.
Two goods are complementary if:
they are used together.
If a good is inferior in an economic sense:
the income elasticity of demand is negative.
The cross elasticity between Rolaids and Tums is expected to be:
positive.
We would expect the cross elasticity between tennis racquets and tennis balls to be:
negative.
The cross elasticity between two goods, X and Y, is positive. From this, we can conclude that goods X and Y
are:
substitute goods.
When the price of bread increases by 3 percent, the demand of crackers increases by 2 percent. Using the %
change method, the cross elasticity of demand between crackers and bread is:
0.67
An increase in the price of good X causes the demand for good Y to shift leftward. One can conclude that X
and Y are:
complements.
The cross elasticity between two goods is 2.5. These goods are:
substitutes.
Inferior goods have an income elasticity of demand that is:
negative.
