Which goods are likely to have highly elastic demand?

Luxury goods and items with many substitutes.

What does the wage elasticity of labor supply measure?

The % change in hours worked divided by the percentage change in wages

What does an elastic demand or supply indicate?

High responsiveness to changes in price

How is price elasticity of demand typically reported?

Without a sign, as its absolute value

What characterizes perfect elasticity?

Quantity demandedor supplied changes infinitely in response toprice changes

What determines whether a tax generates high revenue or not?

The elasticity of demand and supply

How does a decrease in interest rates typically affect the savings assuming an inelastic supply for financial capital?

The quantity of savings remains relatively unchanged.

What does an inelastic demand or supply indicate?

Low responsiveness to price changes

What is one of the purposes of implementing taxes on cigarettes?

To discourage cigarette consumption

How is constant unitary elasticity calculated between two points on a demand curve?

Using the midpoint method to compare percen changes in price and quantity

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Elasticity Chapter 5

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Answers

1
Which goods are likely to have highly elastic demand?
Luxury goods and items with many substitutes.
Goods with readily available inputs and easily expandable production.
Goods with limited supply of inputs.
Necessities with no close substitutes.
2
If demand for a product is inelastic at the current price level, what should the seller do to increase revenue?
Lower the price
Raise the price
Keep the price unchanged
Stop selling the product
3
In a market where supply is more elastic than demand, who bears most of the tax burden?
Consumers
Producers
Both consumers and producers equally
Government
4
What does the wage elasticity of labor supply measure?
The % change in employment divided by the percentage change in hours worked
The % change in wages divided by the percentage change in employment
The % change in wages divided by the percentage change in hours worked
The % change in hours worked divided by the percentage change in wages
5
What does an elastic demand or supply indicate?
No change in quantity demanded regardless of price changes
Low responsiveness to changes in price
Proportional responsiveness of quantity demanded to price changes
High responsiveness to changes in price
6
How is price elasticity of demand typically reported?
With a negative sign
With a positive sign
Without a sign, as its absolute value
As a percentage
7
What characterizes perfect elasticity?
Quantity demanded or supplied remains unchanged.
Quantity demandedor supplied changes infinitely in response toprice changes
Quantity demanded or supplied shows no responsiveness to price changes
Quantity demanded or supplied remains constant.
8
What determines whether a tax generates high revenue or not?
Government regulations
The elasticity of demand and supply
The tax rate
The size of the market
9
How does a decrease in interest rates typically affect the savings assuming an inelastic supply for financial capital?
The quantity of savings remains relatively unchanged.
The quantity of savings increases significantly.
The quantity of savings becomes unpredictable.
The quantity of savings decreases significantly.
10
What does an inelastic demand or supply indicate?
Proportional responsiveness to price changes
Low responsiveness to price changes
No change in quantity demanded
High responsiveness to price changes
11
What is one of the purposes of implementing taxes on cigarettes?
To discourage cigarette consumption
To reduce government revenue
To lower cigarette prices
To promote cigarette consumption
12
What action should a seller take if demand for a product is elastic?
Increase the price
Reduce the quantity available
Lower the price
Keep the price unchanged
13
Who bears most of the tax burden when demand is more inelastic than supply?
Government
Both consumers and producers equally
Consumers
Producers
14
Which concept in economics measures the responsiveness of one variable to changes in another variable?
Elasticity
Revenue generation
Price discrimination
Taxation
15
How is constant unitary elasticity calculated between two points on a demand curve?
By measuring the absolute change in price and quantity.
Using the midpoint method to compare percen changes in price and quantity
By comparing the percentage change in quantity demanded only.
By comparing the percentage change in price only.

Elasticity Chapter 5 Flashcards | StudBud