When calculating the price elasticity of demand, which of the following conditions must be satisfied? All...
When calculating the price elasticity of demand, which of the following conditions must be satisfied?
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All other factors that influence demand must be held constant. |
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Prices of related goods must be allowed to vary but all other factors must be held constant. |
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Prices of related goods must be held constant but all other factors must be allowed to vary. |
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All other factors than influence demand must be allowed to vary. |
Homework Answers
A)All other factors that influence demand must held constant
When calculating the price elasticity of demand all other factors that influence demand must held constant.
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When calculating the price elasticity of demand, which of the
following conditions must be satisfied?
All...
1. In the case of a short-run production function: all of the inputs are variable. at...
1. In the case of a short-run production function: all of the inputs are variable. at least one of the inputs is fixed. the amount of labor employed is held constant. all of the inputs are fixed. 2. In the long-run production function, all of the inputs to the production process are allowed to vary. True False 3. In which of the following situations would a firm be more likely to rely on a capital-intensive method of production? When labor...
When the price of x rises, Marvin responds by changing his demand for x. The substitution...
When the price of x rises, Marvin responds by changing his demand for x. The substitution effect is the part of this change that represents his change in demand a. holding the prices of substitutes constant. b. if he is allowed to substitute as much x for y as he wishes. c. if his money income is held constant when the price of x changes. d. if the prices of all other goods are held constant. e. None of the...
Exercise 4.1: Price Elasticity of Demand The price of a good is $200, and the quantity...
Exercise 4.1: Price Elasticity of Demand The price of a good is $200, and the quantity demanded is 2,000. The price elasticity of demand is-1.25. If the price changes to $204, what is the new quantity demanded? Exercise 4.2: Income Elasticity of Demand A consumer's income is $40,000, and the quantity demanded of a good is 2,000. The income elasticity of demand is +0.60. If the consumer's income changes to $41,000, what is the new quantity demanded? Exercise 4.3: Income...
Which of the following statements about the price elasticity of demand is correct?
Question 5 Which of the following statements about the price elasticity of demand is correct? The absolute value of the elasticity of demand ranges from zero to one. The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. Demand is more elastic the smaller the percentage of the consumer's budget the item takes up. Demand is more elastic in the long run than it is in the short run. Question 6 The cross-price elasticity...
Determinants of the price elasticity of demand Consider some determinants of the price elasticity of...
Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand: The availability of close substitutes . Whether the good is a necessity or a luxury How broadly you define the market . The time horizon being considered A good with many close substitutes is likely to have relatively _______ demand, since consumers can easily choose to purchase one of the close substitutes if the price of the good rises A good's price elasticity of demand depends in part on how necessary...
2. Which of the following statements is true? A) The price elasticity of demand is positive...
2. Which of the following statements is true? A) The price elasticity of demand is positive when there is an inverse relationship between price and quantity demanded. B) A positive income elasticity indicates that demand for a good rises as consumer income falls C) A positive cross-price elasticity for two goods A and B would arise if A and B were demand complements. D) A negative cross-price elasticity for two goods A and B would arise if A and B...
When the income elasticity of demand for a good is negative, one can correctly conclude that:...
When the income elasticity of demand for a good is negative, one can correctly conclude that: total revenue will decrease when the price increases. the good is a substitute. the good is a complement. the good is a normal good. the good is an inferior good. As the price is raised along a straight-line demand curve, the demand curve becomes more elastic. True False Income elasticity of demand is expected to be _____. relatively high for necessities relatively low for...
1. Which of the following statements is true? a. If the price elasticity of demand for...
1. Which of the following statements is true? a. If the price elasticity of demand for exports plus the price elasticity of demand for imports is greater than 1, a depreciation in a currency will improve the current account on the balance of payments b. If the price elasticity of demand for exports plus the price elasticity of demand for imports is equal to 1, a depreciation in a currency will improve the current account on the balance of payments...
1. What is meant by price elasticity? 2. Define the terms elastic and inelastic (in words). 3. What range or price...
1. What is meant by price elasticity? 2. Define the terms elastic and inelastic (in words). 3. What range or price elasticity coefficients correspond to the following: a. elastic demand b. inelastic demand c. unit elasticity 4. What does it mean to say that a product is perfectly inelastic? Provide examples. 5. Explain the relationship between total revenue and elasticity. What will happen to total revenue when price is increased for a product with elastic demand? Inelastic demand? Unit elastic...
9. Determinants of the price elasticity of demand Consider some determinants of the price elasticity of...
9. Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand: The availability of close substitutes Whether the good is a necessity or a luxury How broadly you define the market . The time horizon being considered A good with many close substitutes is likely to have relatively _______ demand, since consumers can easily choose to purchase one of the close substitutes if the price of the good rises. A good's price elasticity of demand depends in part on how necessary...
Exercise 4.1: Price Elasticity of Demand The price of a good is $200, and the quantity demanded is 2,000. The price elasticity of demand is-1.25. If the price changes to $204, what is the new quantity demanded? Exercise 4.2: Income Elasticity of Demand A consumer's income is $40,000, and the quantity demanded of a good is 2,000. The income elasticity of demand is +0.60. If the consumer's income changes to $41,000, what is the new quantity demanded? Exercise 4.3: Income...
2. Which of the following statements is true? A) The price elasticity of demand is positive when there is an inverse relationship between price and quantity demanded. B) A positive income elasticity indicates that demand for a good rises as consumer income falls C) A positive cross-price elasticity for two goods A and B would arise if A and B were demand complements. D) A negative cross-price elasticity for two goods A and B would arise if A and B...
1. What is meant by price elasticity? 2. Define the terms elastic and inelastic (in words). 3. What range or price elasticity coefficients correspond to the following: a. elastic demand b. inelastic demand c. unit elasticity 4. What does it mean to say that a product is perfectly inelastic? Provide examples. 5. Explain the relationship between total revenue and elasticity. What will happen to total revenue when price is increased for a product with elastic demand? Inelastic demand? Unit elastic...
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