chapter 5 practice quiz Flashcards
the elasticity of supply is defined as the ____ change in quantity supplied divided by the ____ change in price.
percentage; percentage
billy bob’s barber shop knows that a 5% increase in the price of their haircuts results in a 15% decrease in the number of haircuts purchased. what is the elasticity of demand facing billy bob’s barber shop?
3.0
demand is said to be ____ when the quantity demanded changes at the same proportion as the price.
unit elastic
if the supply curve for housing is perfectly inelastic
fall and the equilibrium quantity to stay the same.
a demand or supply curve with _____ would be horizontal in appearance.
infinite elasticity
the price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. in order to boost ticket revenues, an economist would advise:
increasing the price of game tickets because demand is inelastic
a 25percent decrease in the price of breakfast cereal leads to a 20percent increase in the quantity of cereal demanded. as a result:
total revenue will decrease
when economists are sketching examples of demand and supply, it’s common to sketch a demand or supply curve that is close to vertical, and then to refer to that curve as _____.
inelastic
a perfectly elastic supply curve is:
horizontal
price elasticity of demand is defined as:
the percentage change in quantity demanded divided by the percentage change in price
if the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:
rise and the equilibrium quantity to stay the same.
supply is said to be ____ when the quantity is supplied is very responsive to changes in price.
elastic
when demand is inelastic:
consumers are not very responsive to changes in price.
a price cut will increase the total revenue a firm receives if the demand for its product is:
elastic
the longer the time period considered, the more the elasticity of supply tends to:
increase
demand is said to be ___ when the quantity demanded is not very responsive to changes in price.
inelastic
if the supply curve for a product is vertical, then the elasticity of supply is:
equal to zero
youth smoking seems to be more ____ than adult smoking – that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price.
elastic
if the supply curve for aspirin is perfectly elastic, than a reduction in demand will cause the equilibrium price to:
stay the same and the equilibrium quantity to fall
if the demand curve is perfectly elastic, then an increase in supply will:
increase the quantity exchanged but result in no change in the price.
