Elasticities

Question 1

Elasticity price of demand measures the

Accepted Answer

% change of price to the % change in quantity demand.

Question 2

If the Ed is -2, and price is increased by 3%, then quantity demanded should ______________.

Accepted Answer

decrease by 6%

Question 3

As time progress the relative price elasticity of the supply curve tends to _______________.

Accepted Answer

increase

Question 4

With Ed = 0.25, revenue will only increase if price is

Accepted Answer

raised.

Question 5

If the elasticity price of supply is equal to 2, then it is currenlty ________________.

Accepted Answer

elastic.

Question 6

Which curve is more likely to represent a necessity item?

Accepted Answer

D1

Question 7

D1 and D2 represent the D for sandwiches and ham sandwiches. Which curve is for ham sandwiches?

Accepted Answer

D2

Question 8

If the Ed is -2, and price is lowered by 3%, then quantity demanded should ______________.

Accepted Answer

increase by 6%.

Question 9

If P decreases by 3% causing Qd to increase by 6%, then Ed = _____ and it is ___________.

Accepted Answer

-2; Elastic.

Question 10

With an elasticity price of demand currently equal to -2, a revenue increase will come from a

Accepted Answer

drop in price.

Question 11

If price is lowered by 3% and thus causes quantity demanded to increase by 2%, then Ed = _____.

Accepted Answer

-0.67

Question 12

If the elasticity price of demand is currently at 3, then to increase revenues price must be

Accepted Answer

decreased.

Question 13

As time progresses demand would change from ___________.

Accepted Answer

D1 to D2

Question 14

If the cross price elasticity is currently equal to 1.1, then the two goods are_______.

Accepted Answer

substitutes

Question 15

Demand curve 2 is relativelty more ____________ than demand curve 1.

Accepted Answer

elastic

Question 16

If the cross price elasticity is 1.8 and price of product Y increases by 2%, then _______.

Accepted Answer

the Qd of product X will increase by 3.6%

Question 17

If the income elasticity is -0.72 then good is ___________ good.

Accepted Answer

an inferior

Question 18

If the income elasticity is 0.98 then good is ___________ good.

Accepted Answer

a normal

Question 19

With an elasticity price of demand (Ed) currently equal to -0.75, revenue will increase with

Accepted Answer

an increase in price.

Question 20

The elasticity price of demand is often written in absolute value terms only.

Accepted Answer

True

Question 21

Demand curve 1 is relativelty more ____________ than demand curve 2.

Accepted Answer

inelastic

Question 22

If the cross price elasticity is currently equal to -0.29, then the two goods are

Accepted Answer

complements

Question 23

Tucker is addicted to ice cream. His demand for ice cream is relatively _____________.

Accepted Answer

vertical (steep slope)

Question 24

Which curve is more likely to represent a complementary good?

Accepted Answer

Impossible to tell

Elasticities

Questions 24

Elasticities

Questions 24