question
Economists distinguish between the short run and the long run by noting that:
answer
some inputs cannot be varied in the short run.
question
Which product is most likely to be the most price elastic?
answer
automobiles
question
Which products are most likely to be the most price elastic?
answer
china and glasswares
question
In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic?
answer
"The different brands are almost identical. I always buy the cheapest."
question
The supply curve for cars will be more elastic the:
answer
longer the time interval considered.
question
Refer to the graph below. If the price of the product increases from $5 to $6 because of a decrease in supply, total revenue would:
answer
stay the same.
question
You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1. To increase total revenues, you should:
answer
increase the price of the software
question
If in the short run the demand for mass transit is inelastic and in the long run the demand is elastic, then a price:
answer
increase will increase total revenue in the short run but decrease total revenue in the long run.
question
A product priced at $5 has annual sales of 1,000 units. When price is reduced to $4, quantity increases to 1,250 units. Other things unchanged, the price elasticity of demand for the product is:
answer
unitary.
question
When the demand for a good is price-elastic at a given output level,
answer
total revenue for the good will increase if its price decreases
question
Refer to the graph below. If the price is P3, then the total revenue is represented by areas:
answer
B + C + D + E + F + G.
question
If an increase in the supply of a product results in a decrease in the price, but no change in the actual quantity of the product exchanged, then:
answer
the price elasticity of demand is zero.
question
An increase in the price of a good will cause total revenue to fall if price elasticity of demand is:
answer
elastic
question
If the price elasticity of demand for a good is .75, the demand for the good can be described as:
answer
inelastic
question
Along a linear downward-sloping demand curve, the price elasticity of demand will be:
answer
different across each price range.
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