Master Price Elasticity
30 Questions
3 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which area of study in economics deals with aggregate economic quantities and is rooted in microeconomics?

  • Microeconomics
  • Firm theory
  • Macroeconomics (correct)
  • Consumer theory

    • What does the theory of the consumer in microeconomics deal with?

  • Demand and supply model of the market
  • Supply of goods and services by profit-maximizing firms
  • Consumption by utility-maximizing individuals (correct)
  • Elasticities, substitution and income effects, and normal and inferior goods

    • What does the theory of the firm in microeconomics deal with?

  • Supply of goods and services by profit-maximizing firms (correct)
  • Consumption by utility-maximizing individuals
  • Elasticities, substitution and income effects, and normal and inferior goods
  • Demand and supply model of the market

    • What is the most important variable that affects the quantity of a good that consumers are willing to buy?

    <p>Price of the good</p> Signup and view all the answers

    What is the fundamental model of the private-enterprise economy?

    <p>Demand and supply model of the market</p> Signup and view all the answers

    Which factor is likely to make the own-price elasticity of demand greater for a good?

    <p>Having many close substitutes</p> Signup and view all the answers

    When faced with the same percentage increase in prices, consumers are more likely to cut back on which type of goods?

    <p>Non-discretionary goods</p> Signup and view all the answers

    Which characteristic is likely to result in a less elastic demand for a good?

    <p>Being seen as necessary instead of optional</p> Signup and view all the answers

    Which of the following is NOT mentioned as a factor that can affect the own-price elasticity of demand?

    <p>Having longer adjustment times</p> Signup and view all the answers

    What is likely to be a complex result of various characteristics when it comes to elasticity?

    <p>The demand for a good</p> Signup and view all the answers

    Which term in Equation 6 remains constant along the entire demand curve?

    <p>$\frac{\Delta Q}{\Delta P}$</p> Signup and view all the answers

    At what price is the elasticity of demand for our hypothetical example equal to -0.2?

    <p>€1.48 per liter</p> Signup and view all the answers

    When is demand said to be unit elastic?

    <p>When the magnitude of the own-price elasticity coefficient is equal to negative one</p> Signup and view all the answers

    What is the interpretation of an elasticity coefficient of -1.28?

    <p>Demand is elastic</p> Signup and view all the answers

    What is the quantity demanded when the price is €1.48 per liter in our hypothetical example?

    <p>47.54 liters per month</p> Signup and view all the answers

    Which of the following is true about the demand function?

    <p>It captures all the influences on consumers' demand for a product or service.</p> Signup and view all the answers

    What does the negative sign on the coefficient of gasoline price in Equation 2 indicate?

    <p>As the price of gasoline increases, the quantity of gasoline consumed decreases.</p> Signup and view all the answers

    What is the dependent variable in Equation 2?

    <p>The quantity of gasoline demanded.</p> Signup and view all the answers

    What is the inverse demand function?

    <p>$Px = 8.92 - 0.156Qx_d$</p> Signup and view all the answers

    What does it mean for two goods to have a negative cross-price elasticity of demand?

    <p>They are complements.</p> Signup and view all the answers

    Which of the following is a drawback of using the coefficient on the price variable as a measure of sensitivity?

    <p>It is dependent on the units of measurement</p> Signup and view all the answers

    What is the formula for own-price elasticity of demand?

    <p>Epxd = %ΔQx_d / %ΔPx</p> Signup and view all the answers

    What does the slope of the demand curve represent?

    <p>The change in price divided by the change in quantity</p> Signup and view all the answers

    What is the interpretation of the demand curve in terms of quantity and price?

    <p>Both A and B</p> Signup and view all the answers

    What does elasticity measure?

    <p>How sensitive one variable is to any other variable</p> Signup and view all the answers

    Which of the following is a characteristic that tends to be predictive of a good's elasticity of demand?

    <p>The portion of the typical budget that is spent on the good</p> Signup and view all the answers

    Which of the following is true about the demand curve facing a seller under conditions of perfect competition?

    <p>It is perfectly elastic</p> Signup and view all the answers

    Which of the following is true about the long-run elasticity of demand for most goods?

    <p>It is greater than the short-run elasticity of demand</p> Signup and view all the answers

    Which of the following is a characteristic that determines whether demand is highly elastic?

    <p>The presence of close substitutes for the good</p> Signup and view all the answers

    Which of the following goods is likely to have a less elastic demand?

    <p>Toothpaste</p> Signup and view all the answers

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser