The value for price elasticity of supply will:

Vary at each point along a supply curve

Elasticity of supply looks at

How responsive sellers are to a change in price.

What is price elasticity of demand?

% changes in demand for a product due to % changes in prices

Income elasticity of demand

sensitivity of quantity demanded to income=(∆Q/Q)/(∆I/I)

The price elasticity of demand

Sensitivity of quantity demanded to price =(∆Q/Q)/(∆P/P)

Cross elasticity of demand formula tells us if

goods are substitutes or complements

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Elasticity

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Questions 16

Answers

1
The income elasticity of a normal good is:
negative
positive
zero
infinitive
2
Which of the following is NOT a determinant of price elasticity of supply?
Costs of production
Length of time
Mobility of factors of production
Spare capacity of firms
3
The value for price elasticity of supply will:
Be the same along a linear supply curve
Vary at each point along a supply curve
Equal 0 when changes to price and QS are equal
Be infinitely elastic for a vertical supply curve
4
Find the cross price elasticity:
-0.33; substitute good
0.33; substitute good
-0.33; complementary good
0.33; complementary good
5
Elasticity of supply looks at
How producers respond to a change in quantity demanded.
How much quantity demanded changes with a change in price.
How responsive sellers are to a change in price.
How sellers respond to a change in consumer's incomes.
6
Find the income elasticity:
2; normal good
-2; inferior good
2; inferior good
-2; normal good
7
What is price elasticity of demand?
% changes in demand for a product due to % changes in prices
quality demanded of a product
supply sensitivity of a product
% changes in supply for a product due to % changes in prices
8
Find the cross price elasticity:
-2; complementary good
2; substitute good
2; complementary good
-2; substitute good
9
How does brand loyalty affect demand elasticity?
inelastic
elastic
10
A positive sign on cross price elasticity of demand indicates that the two products are...
Substitutes
Complements
A match, like humans and Kenneth Branagh films
Inferior Goods
11
Cross price elasticity of demand for A and B is -2.5. They are...
normal
substitutes
inelastic
complements
12
Income elasticity is +0.75 and income has risen by 10%. The value of the change in demand is?
+75%
+7.5%
-7.5%
-75%
13
Income elasticity of demand
sensitivity of income to quantity demanded= (∆I/I)/(∆Q/Q)
sensitivity of quantity demanded to income=(∆Q/Q)/(∆I/I)
sensitivity of price to income=(∆P/P)/(∆I/I)
sensitivity of quantity demanded to income=(∆I/I)/(∆Q/Q)
14
Which of the following is likely to have the highest price elasticity of demand?
Medicine
Eggs
Gasoline
Foreign Travel
15
The price elasticity of demand
Sensitivity of quantity demanded to pricen=(∆P/P)/(∆Q/Q)
Sensitivity of price to quantity demanded=(∆P/P)/(∆Q/Q)
Sensitivity of quantity demanded to price =(∆Q/Q)/(∆P/P)
Sensitivity of price to income = (∆P/P)/(∆I/I)
16
Cross elasticity of demand formula tells us if
goods are normal or inferior
goods are elastic in supply
goods are substitutes or complements
goods are elastic in demand

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