If demand is perfectly elastic, then what is the impact of an increase in price?

A decrease in quantity demanded (Qd) to zero.

What do economists use the concept of elasticity for?

To measure how one variable responds to changes in another

Which of the following is the most important determinant of price elasticity of demand?

The availability of substitutes.

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Dr G's Microeconomics: Chapter 6 Elasticity

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Questions 14

Answers

1
If the Q^d of a good is very responsive to changes in income (ε^I>1), the good is considered ___
An inferior good.
A necessity.
A conspicuous good.
A luxury.
2
Which of the following about total revenue (TR) is correct?
TR is calculated by multiplying P by number of units sold.
All of the above.
TR is the total amount a firm receives from selling a G/S.
TR is affected by changes in P depending on εD
3
In which of the graphs does a price decrease lead to an increase in total revenue?
In the graph on the left.
In both graphs.
In neither graph.
In the graph on the right.
4
A vertical supply curve is __________________.
Perfectly elastic.
Unit elastic.
Unit inelastic.
Perfectly inelastic.
5
When demand is price-elastic, what is the relationship between price and total revenue?
They move inversely.
They move together.
They are not related at all.
They move in unpredictable directions.
6
What is the name given to a good whose price elasticity of supply is less than one?
Price elastic.
Price inelastic.
Unitary elastic.
Infinitely elastic.
7
If demand is perfectly elastic, then what is the impact of an increase in price?
No change in quantity demanded (Qd).
change in Qd that is exactly equal to the change in P.
A very small change
A decrease in quantity demanded (Qd) to zero.
8
What do economists use the concept of elasticity for?
All of the above
To explain how producers respond to consumers’ needs
To define the slope of supply and demand curves
To measure how one variable responds to changes in another
9
What happens to price elasticity (in absolute value) as we move down the demand curve?
It falls
It rises up to the midpoint, and then it falls
It rises
It remains the same
10
Which of the following is the most important determinant of price elasticity of demand?
The difference between necessities and luxuries.
The definition of the market.
The availability of substitutes.
The passage of time.
11
If an increase in P of a complement leads to__in Q^d, the cross-price elasticity of demand is__.
an increase; negative
a decrease; negative
a decrease; positive
an increase; positive
12
Which of the following is true if demand is inelastic
There are few substitutes for the good in question
price elasticity of demand is < 1 in absolute value
All of the above
% change in Qd is less than the % change in P
13
If the value of income elasticity of demand is positive but less than one, the good is
A complement.
Normal and a luxury.
Normal and a necessity.
Inferior.
14
If an increase in P of a substitute leads to__in Q^d, cross-price elasticity of demand is __
increase; positive
a decrease; negative
an increase; negative
a decrease; positive

Dr G's Microeconomics: Chapter 6 Elasticity Flashcards | StudBud