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Elasticity Flashcards | StudBud
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Elasticity
Elasticity
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Questions
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Answers
1
What is the equation for calculating Utility Maximization?
MUx/Py=Muy/Px
MU=P
MU/P=MU/P
MUx/Px=MUy/Py
2
The PED is a measure of the:
Responsiveness of Qd to a change in price
Absolute changes in quantity demanded and price
Sensitivity of Qd of one good compared to price of another
Steepness or slope of the demand curve
3
For which product is income elasticity of demand most likely to be positive?
Used clothing
Retreaded tires
Computers
Cabbage
4
Along a downward sloping demand curve, PED will be:
Greater than 1 across each price range
Different across each price range
Less than one across each price range
Equal to zero across each price range
5
An increase on cigarette taxes to increase TR will only be effective if PED is:
Elastic
Inelastic
Unit
Perfectly elastic
6
A 10% increase in the price of good C gives no change in Qd for good Y. Therefore the two are:
Complements
Independent
Substitutes
Normal
7
If the PED is .75, the demand can be described as:
Inelastic
Normal
Elastic
Inferior
8
Assuming X and Y are substitutes, when the price of X rises, what must happen?
TR received by Y increases
TR received by Y decreases
TR received by X increases
TR received by X decreases
9
The benefit gained from consuming one additional unit of a good or service
total cost
marginal cost
total utility
marginal utility
10
If price rises on an elastic good:
TR will fall
TR will stay the same
TR will be renamed Justin
TR will rise
11
Demand for Cheerios is more price elastic than cereal. Which best explains this?
Cheerios are a luxury
There are more substitutes for Cheerios than cereal
Consumption of cereals is greater than Cheerios
Cereals are a necessity
12
When demand is price elastic at a given output, it is also known that:
TR will increase if price decreases
Increase in price will lead to increase in TR
TR is negative
Large change in price will result in a small change in QD
13
Which of these is not a determinant for PED?
Percentage of your income
How important the good is
Closeness of substitutes
Time to produce the good
14
A price ceiling is...
Above Equilibrium
Below Equilibrium
15
If a good only takes up a small portion of your income then:
the good will be inelastic
the good will be inferior
the good will be elastic
the good will be unit elastic
16
The benefit gained from consuming one additional unit of a good or service
total utility
marginal utility
total cost
marginal cost
17
A positive income elasticity of demand coefficient indicates that:
Two products are complementary goods
A product is an inferior good
Two products are substitute goods
A product is a normal good
18
Which isn't an example of a good with an inelastic supply curve?
Rembrandt paintings
Hot dogs
Oprah
The Eiffel tower
19
Which of these songs is not a Beatles hit?
Can't buy me Love
Let it Be
Band on the Run
Help
20
Elasticity of supply for automobiles will be greatest over a time period of:
6 month
5 years
1 year
1 month
21
A 4% fall in price causes a 4% rise in Qd. The PED is:
Elastic
Zero
Unit elastic
Inelastic
22
When price rises 10% and Qd falls 15%, demand for the product is:
Elastic
Inelastic
Unitary elastic
Cross-elastic
23
Cross price elasticity of demand is:
Negative for complementary goods
Unitary for inferior goods
Negative for substitute goods
Positive for inferior goods
