Exam 6: Elasticity of Demand and Supply

As one moves down a straight-line, down-sloping demand curve, price elasticity (measured by point elasticity method) will:

In the very short run:

Any change in price along a perfectly inelastic demand curve produces:

If a 1 per cent decrease in the price of product A brings about a 3 per cent increase in the sales of product B, then:

Which of the following statements is most likely to be true?

If a 10 per cent price increase causes the quantity demanded for a good to decrease by 5 per cent, demand is elastic.

Which statement about price elasticity of demand along a linear demand curve is true?

Other factors held constant, if there are few close substitutes for a good, demand is more elastic for it.

Inelastic demand is a change of less than 10% in quantity demanded in response to a 1% change in price.

Suppose the price of a bus ticket rises from $2.75 to $3 and the number of tickets sold falls from 10 000 to 8500, the total revenue test:

Narrbegin Exhibit 5.3 Supply and demand curves for good X -In Exhibit 5.3, the price elasticity of supply for good X between points Y and E is:

Consumers will reduce their demand if they believe that the price increase is:

Demand sensitivity depends on all of the following except:

The imposition of a tax on the seller of a product normally results in an increase in market price, which is less than the full amount of the tax.

Price elasticity remains constant along a straight-line demand curve.

Tax incidence depends on:

An economist estimates that 0.67 is the price elasticity of demand for disposable diapers. This suggests that disposable diaper producers could:

When a 2 per cent increase in price generates a greater than 2 per cent decrease in quantity demanded, then: