ECon Chapter 4 Quiz


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Side ASide B
the price elasticity of demand coefficient measures
buyer responsiveness to price changes.
the basic formula for the price elasticity of demand coefficient is:
percentage change in quantity demanded/percentage change in price.
if the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will:
increase the quantity demanded by about 25 percent.
which of the following is not characteristic of the demand for a commodity that is elastic?
the elasticity coefficient is less than one.
if the demand for product x is inelastic, a 4 percent increase in the price of x will:
decrease the quantity of x demanded by less than 4 percent
a perfectly inelastic demand schedule:
can be represented by a line parallel to the vertical axis.
the price elasticity of demand of a straight-line demand curve is:
elastic in high-price ranges and inelastic on low-price ranges.
a leftward shift in the supply curve of product x will increase equilibrium price to a greater extent the:
more inelastic the demand for the product.
the price elasticity of demand is:
negative, but the minus sign is ignored.
the price elasticity of demand for beef is about 0.60. other things equal, this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to:
decrease by approximately 12 percent.
if a demand for a product is elastic, the value of the price elasticity coefficient is:
greater than one.
if the price of hand calculators falls from $10 to $9 and, as a result, the quantity demanded increases from 100 to 125, then:
demand is elastic.
if the price elasticity of demand for gasoline is 0.20:
a 10 percent rise in the price of gasoline will decrease the amount purchased by 2 percent.
moving upward on a downward-sloping straight-line demand curve, we find that price elasticity:
increases continuously.
in which price range of the accompanying demand schedule is demand elastic?
when the percentage change in price is greater than the resulting percentage change in quantity demanded:
an increase in price will increase total revenue.
in which of the following instances will total revenue decline?
price rises and demand is elastic
in which of the following instances will total revenue decline?
price rises and demand is elastic
if a price reduction reduces a firm's total revenue:
the demand for the product is inelastic in this price range.
the demands for such products as salt, bread, and electricity tend to be:
Realitivly Inelastic
The price elasticity of supply measures how:
responsive the quantity supplied of x is to changes in the price of x.
the main determinant of elasticity of supply is the:
amount of time the producer has to adjust inputs in response to a price change.
suppose the supply of product x is perfectly inelastic. if there is an increase in the demand for this product, equilibrium price:
will increase but equilibrium quantity will be unchanged
the supply of known monet paintings is:
perfectly inelastic.
if the income elasticity of demand for lard is 3.00, this means that:
lard is an inferior good.
the formula for cross elasticity of demand is percentage change in:
quantity demanded of x/percentage change in price of y.
the larger the positive cross elasticity coefficient of demand between products x and y, the:
greater their substitutability.
we would expect the cross elasticity of demand between dress shirts and ties to be:
negative, indicating complementary goods.
is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price.
consumer surplus:
refer to the above diagram. if actual production and consumption occur at q3:
an efficiency loss (or deadweight loss) of e + f occurs.

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