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Terms in this set (69)Suppose the price of a pair of premium socks falls from $2.00 to $1.90 and the quantity of the socks demanded increases from 110 to 118. Calculate the price elasticity of demand coefficient using the midpoint formula. 1.4 How is a buyer's responsiveness to price changes measured? By the price elasticity of demand coefficient A product for which a small change in price leads to a large change in the amount purchased is considered _____ relatively elastic The percentage change in quantity demanded divided by the percentage change in price describes _____
the basic formula for the price elasticity of demand coefficient Which of the following are reasons that economists use percentages rather than absolute amounts to measure consumer responsiveness? Using percentages allows economists to correctly determine consumer responsiveness in relation to changes in prices of different products. Using absolutes might arbitrarily affect the impression of buyer responsiveness. A coefficient of price elasticity of demand that is greater than 1 indicates that demand is elastic A 5% decline in the price of cut flowers results in a 3% increase in the quantity demanded. Therefore, the demand for cut flowers is _ inelastic calculating the percentage change in quantity demanded for a given product involves dividing the ______ by the ______. change in quantity demanded; original quantity demanded In measuring consumer responsiveness, we use ______ rather than absolute amounts. percentages Which of the following is true when the demand is unit elastic? The percentage change in quantity demanded is equal to the percentage change in price. An addict's demand for heroin is an example of a demand that is perfectly inelastic A 3% decrease in the price of sugar causes a 3% increase in the quantity demanded. In this example, the demand for sugar has unit elasticity Which of the following would most exemplify perfectly inelastic demand? A diabetic's demand for insulin Which of the following represents a perfectly elastic demand curve? a horizontal line When the price elasticity coefficient is equal to infinity, the product exhibits ______ demand. perfectly elastic When a small change in price causes quantity demanded to increase from zero to all that buyers can obtain, the price elasticity of demand is considered ______. perfectly elastic When a change in price does not cause a change in the quantity demanded, the price elasticity of demand is considered ______. perfectly inelastic A demand curve that runs parallel to the vertical axis indicates a(n) ______. perfectly inelastic In the case of a firm that is selling its output in a purely competitive market, the demand ______. is perfectly elastic Which of the following exemplifies a product that is perfectly elastic? A mining firm selling its output in a purely competitive market Which of the following would most exemplify perfectly inelastic demand? A diabetic's demand for insulin If product demand is relatively elastic and the price is decreased, total revenue will increase Which of the following exemplifies a product that is perfectly elastic? A mining firm selling its output in a purely competitive market When prices and total revenue change in opposite directions, the price elasticity of demand is ______. elastic
If the loss in revenue from a lower price is exactly offset by the gain in revenue from the increase in sales, then the price elasticity of demand is ______. unit elastic When price and total revenue move in the same direction, demand is ______. inelastic When demand is inelastic, the percentage change in quantity demanded is ______ the percentage change in price. less than Which of the following is true of the coefficient of price elasticity of demand as price increases along a linear demand curve? it increases What type of price elasticity of demand occurs when there is a relatively large percentage change in quantity divided by a relatively smaller percentage change in price? relatively elastic demand Demand is more price elastic toward the upper-left segment of the demand curve because the original reference quantity ______. is small In the upper-left portion of a linear demand curve, price elasticity of demand tends to be which of the following? more elastic For all down-sloping demand curves, the price elasticity of demand is more elastic ______. toward the upper left The segment of the total-revenue curve that sits between the initial upward sloping portion and the later downward sloping portion illustrates when demand is ______.
unit elastic What accounts for the small price elasticity of demand coefficient (Ed) in the lower-right segment of the linear demand curve? A small percentage change in quantity relative to a large percentage change in price Lowering the price of a product along the elastic range of demand will ______. increase total revenue Which of the following goods or services is more likely to be price inelastic? an appendectomy Which of the following is a determinant of the price elasticity of demand? substituiality For a consumer with a household income of $50,000, which item would have the greatest price elasticity of demand? new car Product demand is generally more ______ when the time period under consideration is longer. elastic Which of the following goods and services would most likely exhibit an inelastic price elasticity of demand coefficient? salt, automobile repairs, medical care The fact that consumers are not always able to adjust immediately to price changes means that product demand is more ______ over time. elastic For policymakers to achieve the goal of higher total farm incomes, farm output must be ______. restricted The demand for most farm products is ______. highly inelastic Product ______ should be considered when discussing time as a determinant of price elasticity of demand. durability Excise taxes are levied on which of the following? Products with a low elasticity of demand Which of the following are viable arguments in favor of legalizing illegal drugs? - Drug-related street crime would decline. Which of the following are viable arguments against the legalization of illegal drugs? Overall demand for illegal drugs is more elastic than proponents think. We can expect a greater response, and therefore greater elasticity of supply, the ______. more time the firm has to react to price changes Supply is perfectly inelastic during the ______. immediate market period During the immediate market period, which products would not have a supply curve that is perfectly inelastic when prices rise? Soft drinks In the ______, a farmer would have time to cultivate a crop more intensively by applying more variable inputs, such as labor, fertilizer, and pesticides. short run What does "shiftability" refer to in economics? A firm's ability to move resources from the production of one product to another Because a producer does not have time to respond to a change in demand during the immediate market period ______. supply is perfectly inelastic An increase in production is reflected in somewhat more elastic supply in the ______, short run True or false: It is possible to have no immediate market period for producers whose goods can be inexpensively stored. true Supply is perfectly inelastic during the ______. immediate market period Why is the supply curve more elastic in the long run than in the short run? Because firms have time to adjust their plant sizes In the short run, the ______ price is lower than in the immediate market period. equilibrium True or false: When considering the price elasticity of supply, price and total revenue always move together. true Which of the following explain the high prices of antiques? Highly inelastic supply Which of the following factors have increased the demand for antiques over time? (Check all that apply.) Rising incomes With price elasticity of supply, the supply curve slopes upward because of the positive relationship between which of the following? Price and amount supplied In times of economic turmoil, demand rises for ______ as a speculative financial investment. gold Which of the following are the main sources of gold price fluctuations? Highly inelastic supply A corporate merger between two firms is more likely to meet with government approval if the cross elasticity coefficient of demand for both firms' products is ______. near zero Which type of elasticity shows how responsive demand is to a change in earnings? Income elasticity of demand True or false: Income elasticity for farm products is greater than income elasticity for automobiles. False The government uses the idea of the ______ elasticity of demand to determine whether a proposed merger between two firms is a good idea. cross During the immediate market period, which products would not have a supply curve that is perfectly inelastic when prices rise? Soft drinks Sets with similar termsElasticity of Demand70 terms jennsterlov79 Elasticity of Demand70 terms isdigi Microeconomics Final Exam Review152 terms hannah_barnwell Economic Review Chapter 3 - Midterm36 terms Alsaihatif Sets found in the same folderECONOMICS CHAPTER 634 terms AGGIEALLDAY Ch 3 Learnsmart63 terms luvbubba ECON 1001: Chapter 9 (Businesses and Costs of Prod…75 terms rahelsitotaw ECON chapter 1061 terms sammyg1515 Other sets by this creatorexam 419 terms luvbubba hw #1414 terms luvbubba learnsmart ch 1320 terms luvbubba learnsmart ch 1440 terms luvbubba Verified questions
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Which of the following are viable arguments in favor of legalizing illegal drugs quizlet?
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