Elasticity of supply will increase when:
  • It becomes easier to substitute one factor of production for another in a manufacturing process
  • Supply is relatively inelastic so changes in demand have a large effect on price
  • A 1 percent decrease in price causes a 2 percent decrease in quantity supplied
  • A reduction in price results in a decrease in total revenue
Cross elasticity of demand is:
  • A negative number
  • Negative for complementary goods
  • Inelastic demand for business travel
  • A 1 percent decrease in price causes a 2 percent decrease in quantity supplied
If a product has a short-run elasticity of supply equal to zero, then an increase in the demand for the product will:
  • The price elasticity of demand is zero
  • Decrease because the demand is price-inelastic
  • Increased price elasticity of demand for movie theater tickets
  • Increase price and leave quantity sold unchanged
Blossom, Inc. sells 500 bottles of perfume a month when the price is $A huge increase in resource costs forces Blossom to raise price to $9, and the firm only manages to sell 460 bottles of perfume. The price elasticity of demand is:
  • It will decrease
  • 0.33 and inelastic
  • Substitute goods
  • Decrease because the demand is price-inelastic
In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic?
  • Increased price elasticity of demand for movie theater tickets
  • The price elasticity of demand is zero
  • "The different brands are almost identical. I always buy the cheapest"
  • There are more substitutes for Cheerios than for cereals as a whole
A state government wants to increase the taxes on cigarettes to increase tax revenue. Because cigarettes are addictive, we would expect its demand to be:
  • Perfectly inelastic
  • Inelastic, thus the government's cigarette-tax revenues would rise with a tax increase
  • A positive number
  • Inelastic demand for business travel
Economists distinguish among the immediate market period, the short run, and the long run by noting that:
  • Increased price elasticity of demand for movie theater tickets
  • Responsiveness of buyers of a good to changes in its price
  • Supply is most elastic in the long run, and least elastic in the immediate market period
  • Supply is relatively inelastic so changes in demand have a large effect on price
Airlines charge business travelers more than leisure travelers because there is a more:
  • A negative number
  • The price elasticity of demand is zero
  • Inelastic
  • Inelastic demand for business travel
Demand is said to be inelastic when:
  • A 1 percent decrease in price causes a 2 percent decrease in quantity supplied
  • A reduction in price results in a decrease in total revenue
  • Responsiveness of buyers of a good to changes in its price
  • There are a large number of good substitutes for the good
The cross elasticity of demand between digital cameras and memory cards is likely to be:
  • Inelastic
  • Inelastic demand for business travel
  • A negative number
  • Consumers will be better able to find substitutes
Most goods can be classified as normal goods rather than inferior goods. The definition of a normal good suggests that:
  • There are more substitutes for Cheerios than for cereals as a whole
  • Decrease because the demand is price-inelastic
  • The income elasticity for the good is greater than 0
  • Increase price and leave quantity sold unchanged
The price elasticity of demand is a measure of the:
  • A 1 percent decrease in price causes a 2 percent decrease in quantity supplied
  • Consumers will be better able to find substitutes
  • Responsiveness of buyers of a good to changes in its price
  • Supply is relatively inelastic so changes in demand have a large effect on price
A negative income elasticity of demand coefficient indicates that:
  • There are a large number of good substitutes for the good
  • The price elasticity of demand is zero
  • The product is an inferior good
  • Responsiveness of buyers of a good to changes in its price
For which product is the income elasticity of demand most likely to be negative?
  • A negative number
  • Inelastic
  • Elastic
  • Used clothing
The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that:
  • There are more substitutes for Cheerios than for cereals as a whole
  • Increased price elasticity of demand for movie theater tickets
  • The income elasticity for the good is greater than 0
  • Increase price and leave quantity sold unchanged
We use the midpoint formula in computing the price elasticity of demand coefficient in order to:
  • Convert absolute changes into percent-changes
  • Increased price elasticity of demand for movie theater tickets
  • Consumers will be better able to find substitutes
  • There are a large number of good substitutes for the good
Suppose you are given the following data on demand for a product. The price elasticity of demand (based on the midpoint formula) when price decreases from $9 to $7 is:
  • 1.5
  • 1.60
  • Decrease because the demand is price-inelastic
  • 1.0
The cross elasticity of demand between Quaker State motor oil and Texaco motor oil is likely to be:
  • A positive number
  • Inelastic, thus the government's cigarette-tax revenues would rise with a tax increase
  • A negative number
  • The law of demand
The price-elasticity of demand is always negative because of:
  • Responsiveness of buyers of a good to changes in its price
  • A positive number
  • A negative number
  • The law of demand
If the price-elasticity coefficient for a good is .75, the demand for that good is described as:
  • Elastic
  • Inelastic demand for business travel
  • A negative number
  • Inelastic
In the immediate market period for a highly-perishable crop like tomatoes, the individual farmer's supply curve tends to be:
  • A positive number
  • The law of demand
  • Inelastic, thus the government's cigarette-tax revenues would rise with a tax increase
  • Perfectly inelastic
When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price-elasticity of demand coefficient for this product is:
  • Inelastic
  • 1.0
  • 1.5
  • 1.60
Chuck Grim has a price elasticity of demand for beer of 1.Suppose that the price of beer is increased by 10 percent. What will happen to the total amount Chuck spends on beer?
  • A negative number
  • It will decrease
  • 0.33 and inelastic
  • Substitute goods
The price elasticity of demand increases with the length of the period considered because:
  • A negative number
  • Consumers will be better able to find substitutes
  • Responsiveness of buyers of a good to changes in its price
  • Convert absolute changes into percent-changes
0:0:1



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