5: Elasticity Flashcards
(6 cards)
Factors change the elasticity of demand
- Goods with close substitute will have MORE elastic demand
- Luxury goods MORE elastic than necessities
- The longer time, the more elastic demand
- Narrow define (~pork): more elastic than broad define (~food)
In general, a steeper supply curve is more likely to be
a. price elastic.
b. none of these answers.
c. unit price elastic.
d. price inelastic.
D
If the cross-price elasticity between two goods is negative, the two goods are likely to be
a. substitutes.
b. complements.
c. necessities.
d. luxuries.
B
If a supply curve for a good is price elastic, then
a. the quantity supplied is sensitive to changes in the price of that good.
b. the quantity demanded is insensitive to changes in the price of that good.
c. the quantity demanded is sensitive to changes in the price of that good.
d. the quantity supplied is insensitive to changes in the price of that good.
e.
none of these answers.
A
If a fisherman must sell all of his daily catch before it spoils for whatever price he is offered, once the fish are caught the fisherman’s price elasticity of supply for fresh fish is
a. zero.
b. infinite.
c. one.
d. unable to be determined from this information.
A
If consumers always spend 15 percent of their income on food, then the income elasticity of demand for food is
a. 1.50.
b. 1.15.
c. none of these answers.
d. 0.15.
e. 1.00.
E
