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Terms in this set (82)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. How is a buyer's responsiveness to price changes measured? By the price elasticity of demand coefficient What type of demand is represented by a given change in price that leads to a larger change in the quantity demanded? Elastic If the quantity demanded changes only slightly in response to a significant change in price, the demand is said to be ______. relatively inelastic Calculating the percentage change in quantity demanded for a given product involves dividing the ______ by the ______. change in quantity demanded; original quantity demanded If a 4% decrease in the price of coffee leads to a 2% increase in the quantity demanded, the price elasticity of demand for coffee is relatively price ______. inelastic The formula for calculating price elasticity of demand that involves terms for the average of two quantities and the average of two prices is known as the _____. midpoint In measuring consumer responsiveness, we use ______ rather than absolute amounts. percentages In the price-elasticity coefficient formula, the numerator being greater than the denominator indicates that demand is ______. elastic What type of price elasticity of demand results from a relatively small percentage change in quantity demanded divided by a relatively larger percentage change in price? Inelastic A product for which a small change in price leads to a large change in the amount purchased is considered ______. relatively 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 A 3% decrease in the price of sugar causes a 3% increase in the quantity demanded. In this example, the demand for sugar has ____ elasticity. unit When demand is unit elastic, the percentage change in quantity demanded is ______ the percentage change in price. = to A small percentage change in quantity demanded divided by a larger percentage change in price indicates _______ demand. inelastic When the price elasticity of demand is perfectly_____. a change in price causes no change in the quantity demanded. inelastic A demand curve that runs parallel to the vertical axis indicates a(n) ______. perfectly inelastic demand 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. What type of price elasticity of demand results from a relatively small percentage change in quantity demanded divided by a relatively larger percentage change in price? Inelastic A product for which a small change in price leads to a large change in the amount purchased is considered ______. relatively elastic What is represented by the P x Q rectangle lying below a point on a demand curve? total revenue When a change in price does not cause a change in the quantity demanded, the price elasticity of demand is considered ______. perfectly inelastic Which of the following represents a perfectly elastic demand curve? A horizontal line A product that exhibits perfectly elastic demand has a price elasticity coefficient equal to ______. infinity When prices and total revenue change in opposite directions, the price elasticity of demand is ______. elastic Total revenue can be graphically evaluated and depicted using the ______ curve. demand If product demand is relatively elastic and the price is decreased, total revenue will increase When the price elasticity of demand is perfectly _______, a change in price causes no change in the quantity demanded. inelastic A demand curve that runs parallel to the vertical axis indicates a(n) ______. perfectly inelastic If product demand is relatively elastic, what will be the effect on the total revenue if the price is increased? it decreases When the price elasticity of demand is relatively ______, a price decrease will increase total revenue. elastic When the demand for a product is and the price is reduced, total revenue will fall. inelastic Total revenue will rise under which of the following circumstances? When the price falls on a good or service with an elastic price elasticity of demand When the price elasticity of demand for a product is relatively price elastic and price is ______, total revenue will ______. increased; decrease If demand is ______, a price decrease will reduce total revenue. inelastic 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 If product demand is relatively elastic and the price is decreased, total revenue will ____________. increase When the price elasticity of demand is perfectly ________, a change in price causes no change in the quantity demanded. inelastic
A decrease in price will lead to a decrease in total revenue if demand is ______. inelastic When the price elasticity of demand is inelastic, a decrease in price will ______ total revenue. decline In the upper-left portion of a linear demand curve, price elasticity of demand tends to be which of the following? MORE ELASTIC When the price elasticity of demand is perfectly _________ , a change in price causes no change in the quantity demanded. inelastic The demand for Reebok sneakers is relatively price elastic Which of the following typically varies over the different price ranges of the same demand curve? Elasticity Demand for a specific brand of handbag is more price ______ than demand for handbags in general. elastic Demand is relatively price _______ when price and total revenue change in opposite directions. elastic Which of the following goods and services would most likely exhibit an inelastic price elasticity of demand coefficient? -Medical care Restaurant meals, smartwatches, and concert tickets are all examples of goods that exhibit higher price _____ of demand. elasticity Which of the following goods or services is more likely to be price inelastic? An appendectomy The demand for most farm products is ______. highly inelastic The more a good or service is considered to be a luxury rather than a necessity, the more ______ the demand for the good. elastic If the quantity supplied by producers is relatively responsive to price changes, supply is relatively price _______. elastic A product that is considered to be a necessity would have a _____ price elasticity of demand. low The percentage change in quantity supplied divided by the percentage change in price measures the price elasticity of _______. supply If the quantity supplied by producers is relatively insensitive to price changes, supply is ______. relatively price inelastic Supply is ______ if the price elasticity coefficient is greater than 1. elastic We can expect a greater response, and therefore greater elasticity of supply, the ______. more time the firm has to react to price changes True or false: The price elasticity of supply is the percentage change in price divided by the percentage change in quantity supplied. false In the ______ period, a farmer would have time to cultivate a crop more intensively by applying more variable inputs, such as labor, fertilizer, and pesticides. short-run 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 If the price elasticity coefficient of supply is less than 1, supply is ______. inelastic True or false: When considering the price elasticity of supply, price and total revenue always move together. true What does "shiftability" refer to in economics? A firm's ability to move resources from the production of one product to another Which of the following explain the high prices of antiques? -Strong demand The price elasticity of supply is much more ________ in the long run than in the short run. elastic With price elasticity of supply, the supply curve slopes upward because of the positive relationship between which of the following? Price and amount supplied By comparing two different products, _____ elasticity of demand provides insight into consumer behavior concerning substitute and complementary goods. cross Supply for one-of-a-kind antiques is ______. perfectly inelastic The formula for the cross elasticity of demand is written as the percentage change in the quantity demanded of one product by the percentage change in the price of another product. (Do not use symbols) divided To calculate the ______, take the percentage change in quantity demanded of product X and divide by the percentage change in the price of product Y. coefficient for the cross-price elasticity of demand Larger positive cross elasticity implies greater ______ between two products. substitutability How many products (goods and services) are considered when referring to the cross elasticity of demand formula? two True or false: When an increase in the price of one good decreases the demand for another good, the goods are called complementary goods. true 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
If the cross-price elasticity of demand between two goods is positive, then the pair must be ______. substitutes Which type of elasticity shows how responsive demand is to a change in earnings? Income elasticity of demand By comparing two different products, ________ elasticity of demand provides insight into consumer behavior concerning substitute and complementary goods. cross Any good for which more is demanded as income rises is a(n) ______ good. normal The government uses the idea of the ______ elasticity of demand to determine whether a proposed merger between two firms is a good idea. cross The percentage change in quantity demanded divided by the percentage change in income is the formula for the ______ elasticity of demand. income True or false: A positive income elasticity coefficient designates an inferior good. false If the income elasticity coefficient is positive, then the good is a _________ good. normal Sets with similar termsECO2023 Chapter 671 terms kdobsss econ ch. 424 terms ntw4m2 Chapter 643 terms kimkong91 AP Econ Chapter 2031 terms lily_hahn Sets found in the same folderECO-231: Chapter 4: Market Failures Caused by Exte…146 terms Salazarm764 ECON 2302: Chapter 640 terms rheganseverin ECON 2301: Chapter 4/537 terms rheganseverin Chapter 750 terms alcarazxo Other sets by this creatorFinanca Exam 26 terms sabrina_yock microeconomics chapter 1984 terms sabrina_yock Microeconomics Chapter 144 terms sabrina_yock Microeconomics Chapter 349 terms sabrina_yock Verified questionsECONOMICS How do capital markets and money markets differ? Verified answer
ECONOMICS Suppose that the government changes the tax policy so that people pay lower taxes if they save more money. The benefits are significant enough that people shift about 10 percent of their money from their checking accounts into certificates of deposit. How would this change the affect the amount of money in M1 and M2? Verified answer ECONOMICS In many of the world’s poorest countries, nearly 50 percent of the population is under 15 years of age. If these people are to help improve the productivity of their economies, they must be trained in modern methods of production. In 2000, just over 4 million of the 8.8 million people of Chad were under 15. Explain why it would be difficult for many of these children to be educated and become productive members of a growing economy. Verified answer ECONOMICS Suppose you were the head of a less developed country. Which obstacle to development would you tackle first? Why? Verified answer Recommended textbook solutions
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What happens when price elasticity of demand is elastic?If the quantity demanded of a product changes greatly in response to changes in its price, it is elastic. That is, the demand point for the product is stretched far from its prior point. If the quantity purchased shows a small change after a change in its price, it is inelastic.
When the price elasticity of demand is relatively elastic than the price elasticity of supply the burden of an excise tax falls mainly on?a. When the price elasticity of demand is relatively more elastic than the price elasticity of supply, the burden of an excise tax falls mainly on sellers. If demand is relatively inelastic, then the supply changes more than the demand and more tax will go on to buyers.
When demand is relatively price elastic in absolute terms it means that the price elasticity of demand is?The PED coefficient is usually negative, although economists often ignore the sign. Demand for a good is relatively inelastic if the PED coefficient is less than one (in absolute value). Demand for a good is relatively elastic if the PED coefficient is greater than one (in absolute value).
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When the price elasticity of demand for a product is relatively price elastic and price is?
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