question

Price elasticity of demand is a concept used to describe what concept in economics?

answer

-the magnitude of the change in quantity due to a change in price

-Economists use the concept of elasticity to measure the percentage changes in quantity owing to any changes in price.

-Economists use the concept of elasticity to measure the percentage changes in quantity owing to any changes in price.

question

Which of the following is the correct formula for price elasticity of demand?

answer

%Δ in Quantity demanded / %Δ change in price

question

Which of the demand curves shown in this graph is perfectly elastic?

answer

This curve is perfectly elastic because at a single price different quantities are demanded.

Perfectly elastic curves are horizontal.

Perfectly elastic curves are horizontal.

question

The price elasticity of demand for a brand of breakfast cereal is 5.

Based on this elasticity, what will be the percentage change in the quantity of breakfast cereal bought as a result of a %5 decrease in the cereal's price?

Based on this elasticity, what will be the percentage change in the quantity of breakfast cereal bought as a result of a %5 decrease in the cereal's price?

answer

+25%

The 5\%5%5, percent decrease in price will cause quantity demanded to increase by 555 times more than the change in price (since the elasticity coefficient is -5−5minus, 5). This means quantity demanded increases by 25\%25%

The 5\%5%5, percent decrease in price will cause quantity demanded to increase by 555 times more than the change in price (since the elasticity coefficient is -5−5minus, 5). This means quantity demanded increases by 25\%25%

question

When the price of spicy sauce was $10, people bought 100 jars. When the price increased to $12, people only bought 40 jars.

What is the price elasticity of demand for spicy sauce?

What is the price elasticity of demand for spicy sauce?

answer

3

question

What happens to price elasticity of demand as the price of a good increases along a linear demand curve?

answer

Price elasticity of demand increases.

As you move to the left along a linear demand curve, the price elasticity of demand increases. Even though the slope of a linear demand curve is constant, elasticity is not.

As you move to the left along a linear demand curve, the price elasticity of demand increases. Even though the slope of a linear demand curve is constant, elasticity is not.

question

If the price elasticity of demand is unit elastic how does quantity demanded change in response to a %25 increase in price?

answer

Quantity demanded decreases by 25%

Unit elasticity means that a change in quantity demanded will equal the magnitude of change in price, so a 25%, percent increases in price decreases quantity demanded %25.

Unit elasticity means that a change in quantity demanded will equal the magnitude of change in price, so a 25%, percent increases in price decreases quantity demanded %25.

question

Which of the following best describes what price elasticity of demand measures?

answer

How responsive buyers are to a change in the price of a good

Elasticities measure a response to a change in some factor, such as price or income. Price elasticity of demand measures how quantity demanded changes (the response) caused by a change in price (the factor that is changing).

Elasticities measure a response to a change in some factor, such as price or income. Price elasticity of demand measures how quantity demanded changes (the response) caused by a change in price (the factor that is changing).

question

When the price of fuzzy blankets decreased by %10, Mr. Fields bought %20 more fuzzy blankets. What is Mr. Fields' price elasticity of demand for blankets?

answer

Elastic

question

If the price elasticity of demand for apples is 333, then what will be the impact on total revenue if price increases?

answer

Total revenue will decrease

question

Susan's Shellfish Shack increased the price of their shrimp sandwiches by %10, and her total revenue increased %20. Based on this information, what can we conclude about shrimp sandwiches?

answer

Consumers consider shrimp sandwiches necessities

question

Total Revenue Rule

answer

if you increase the price of a good with inelastic demand, then total revenue increases

question

Which of these values of price elasticity will result in no change in total revenue if a firm increases its price?

answer

1

A price elasticity of demand equal to 1 indicates unit elasticity. When a firm has a demand that is unit elastic, any increase in price is offset by an equal decrease in quantity and, as a result, total revenue doesn't change.

A price elasticity of demand equal to 1 indicates unit elasticity. When a firm has a demand that is unit elastic, any increase in price is offset by an equal decrease in quantity and, as a result, total revenue doesn't change.

question

When is demand inelastic?

answer

When there are few substitutes for a good

question

The price of lemons increased 10%. How much did the quantity of lemons increase if the price elasticity of supply of lemons is 2, and how is that elasticity interpreted?

answer

20%; elastic

question

Farmers can easily grow raspberries or strawberries in the same soil using the same inputs and achieve the same output per acre in pounds. All else equal, what is the value of the relative price elasticity of supply of raspberries over two days or two years?

answer

relatively inelastic in two days; relatively elastic in two years

question

When the price of canned pickle juice increased 50, the quantity supplied of pickle juice increased %40. What is the price elasticity of supply, and how is that value interpreted?

answer

0.80; inelastic

question

Quinn's Cupcake shop has a price elasticity of supply of 3.75. Which of the following statements is the correct interpretation of this price elasticity of supply?

answer

For every %1, increase in price, Quinn will be willing to sell %3.75 more cupcakes

question

Which of the following is the best description of the total revenue test?

answer

a way of using elasticity to predict changes in the the money a firm takes in

question

What information is given by the price elasticity of supply of popcorn?

answer

How responsive sellers of popcorn are to changes in the price of popcorn

question

assume there is a range of output over which there are gains from specialization and the division of labor. What must be true if average variable costs (AVC) are increasing?

answer

MC must be greater than AVC

question

Which of the following best describes average total cost?

answer

The cost of producing a typical unit of output