A good is considered normal when its income elasticity of demand is ___ and inferior when the its income elasticity of demand is ___.
Greater than zero, less than zero. |
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Less than zero, greater than zero. |
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Greater than one, less than one. |
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Less than one, greater than one. |
If an increase in prices decreases total revenue in the short run, what will it do to total revenue in the long run?
It will decrease total revenue in the long run. |
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It will increase total revenue in the long run. |
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It will leave total revenue unchanged in the long run. |
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Any of the above results are possible in the long run. |
When a good is taxed, the tax burden
Question 6 options:
falls disproportionately on the side of the market that is more elastic. |
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falls disproportionately on the side of the market that is more inelastic. |
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falls disproportionately on the side of the market that is closer to unit elastic. |
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is not impacted by the relative elasticities of supply and demand. |
If the supply of good A is perfectly elastic, a decrease in demand will:
reduce the equilibrium quantity traded, but leave the price unchanged. |
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reduce the equilibrium quantity traded, and reduce the price. |
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reduce the equilibrium price, but leave the quantity traded unchanged. |
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reduce the equilibrium price traded, but increase the quantity traded. |
If demand is unit elastic between 2 points (using the mid-point method):
Total revenue and prices rise and fall together. |
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Total revenue rises as price falls. |
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Total revenue falls as price rises. |
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Total revenue remains constant as price rises or falls. |
If one is interested in knowing whether or not a pair of products are substitutes, one would be interested in the value of the:
elasticity of supply. |
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price elasticity of demand. |
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income elasticity of demand. |
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cross-price elasticity of demand. |
Question : A good is considered normal when its income elasticity of demand is ___ and inferior when the its income elasticity of demand is ___.
Answer : Greater than zero, less than zero
If income elasticity of demand of a good is positive, then the good is considered to be a normal good. Thus its income elasticity will be greater than one. In the same way, if the income elasticity of demand of a good is negative, then that good can be considered as an inferior good. Thus its income elasticity of demand will be less than one.
A good is considered normal when its income elasticity of demand is ___ and inferior when the...
Suppose that the price elasticity of demand of a good is -3. Its demand is _________ and the percentage change in its quantity demanded is ________ than the percentage change in its price. A. Elastic: Smaller B. Elastic: Greater C. Inelastic: Smaller D. Inelastic: Greater Which of the following is not a determinant of the price elasticity of demand? A. Availability of substitutes B. Degree of necessity C. Cost relative to income D. Availability of inputs With a(n) ______ demand,...
If the income elasticity of demand for a good is negative, then the good must be an inferior good. True False Question 2 The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises. True False Question 3 A price ceiling set above the equilibrium price is not binding. True False Question 4 The cross-price elasticity of garlic salt...
If the income elasticity of demand is ________ zero, then the good is ________. a. greater than; normal b. less than; normal c. equal to; unit elastic d. equal to; perfectly elastic As the costs of higher education rises, which of the following certainly occurs? a. More students will attend classes. b. Opportunity costs of education are higher. c. More choices exist. d. Class size is lower.
5. 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 __(Elastic, Inelastic)___ demand since consumers can easily choose to purchase one of the close substitutes if the price of the good rises. A...
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 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...
income elasticity of demand for a normal good is always less than one equal to zero less than zero greater than zero
22. The price elasticity of demand measures the responsiveness of the change in the: A) quantity demanded to a change in the price. B) price to a change in the quantity demanded. C) lope re enterprise D) slope of the demand curve to a change in the quantity demanded. 23. The price of gasoline rises 5% and the quantity of gasoline purchased falls 1%. price elasticity of demand is equal to _______ and demand is described as _______ A) 0.2; inelastic B) 5; inelastic C) 0.2; elastic 24. For a...
1. If hot dogs are an inferior good, a decrease in income will cause the equilibrium price of hot dogs to rise a. True b. Fals dicale the answer choice that hest cmnletes the statement or answers the question. 2. If the demand curve for a good shifts leftward. a quantity demanded is less at each price. b. quantity demanded remains constant at each price. c. quantity demanded is greater at each price. d. demand is greater at each price....
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...