ch 5 MicroEcon

35 cards·by amcloopy

Study this deck

Elasticity is the friction that develops between buyers and sellers in a market

false, measure of the responsiveness of quantity demanded to one of its determinants

The price elasticity of demand easures a buyers responsiveness to a change in the price of a good.

true

Demand is said to be elastic if the price of the good responds substantially to changes in demand

false

When quantity demanded responds only slightly to changes in price, demand is said to be unit elastic

false, inelastic

Demand for a good would tend to be more inelastic the fewer the available substitutes

true

Chocolate Chip Cookie Dough ice cream would tend to have very elastic demand because it must be eaten quickly

false

A good will have a more inelastic demand the greater the availability of close substitutes

true

The greater the price elasticity of demand, the more likely the product is a necessity

false, inelastic

If the price elasticity of demand for a good is 4, a 10% increase in price would result in a 4% decrease in the quantity demanded

false, increase

if a 15% increase causes a 30% decrease in quantity demanded, this product might have no close substitute

false

Demand is elastic if elasticity is less than 1

false, e>1

Demand is inelastic if elasticity is less than 1

e < 1, true

Demand is unit elastic if elasticity is less than 1

false, equal to 1

Demand is said to be unit elastic if quantity demanded changes by the same percent as the price

e=1, true

Elasticity of demand=closely related to the slope of demand curve. More responsive buyers are to a change in price, steeper demand curve

false

Alice says that she would buy 1 banana split a day regardless of the price. Alice's demand for banana splits is perfectly inelastic

true

For a horizontal demand curve, slope is undefined and elasticity equals 0

false, elasticity is infinite

The difference b/w slope and elasticity is that slope measures actual changes and elasticity measures percentage changes

true

Suppose the price elasticity of demand for basketballs is 1.2. a 15% increase in price will result in an 18% decrease in quantity demanded

true

The main determinants of the price elasticity of supply is time

true

The main determinants of the price elasticity of supply is time

true

The price elasticity of supply measures how much the quantity supplied responds to changes in input prices

true

If the quantity supplied responds only slightly to charges in price, then supply is said to be elastic

false, substantially

If a 30% change in price causes a 15% change in quantity supplied, then the price elasticity of supply is 1/2 and supply is elastic

e < 1, false, inelastic

When a supply curve is relatively flat, the supply is relatively elastic

true

If sellers do not respons at all to a change in price, technological advancement must be great

false

If the elasticity of supply is 0, then supply is very elastic

false, perfectly inelastic

Concerning a vertical supply curve, supplies will not respond to a change in price

true

If the quantity supplied is the same regardless of price, then the supply curve would be elastic

false, perfectly inelastic

If two supply curves pass thru the same point and one is steep and the other is flat, the steeper supply curve is more inelastic

true

If the elasticity of a product is 2.5, we know that supply is inelastic

false, e>1, elastic

The elasticity of a perfectly elastic supply curver = 0

false, e=infinity

As elasticity rises, the supply curve gets flatter

true

As the elasticity of supply approaches infinity, very small change in price will lead to very large changes in quantity supplied

true

A decrease in supply will cause the largest increase in price when both supply and demand are inelastic

true