Untitled Quiz

Play an AI-generated podcast conversation about this lesson

What happens to total revenue when price increases from a point on the upper part of the demand curve?

Total revenue decreases. (correct)
Total revenue remains constant.
Total revenue fluctuates unpredictably.
Total revenue increases.

Which statement correctly describes the price elasticity of demand for a vertical demand curve?

Price elasticity is equal to 1.
Price elasticity is greater than 1.
Price elasticity is undefined.
Price elasticity is equal to 0. (correct)

In which scenario is demand considered perfectly inelastic?

A 2% price decrease leads to a 2% increase in quantity demanded.
A 2% price increase causes a 0% decrease in quantity demanded. (correct)
A 2% price decrease results in a 2% decrease in quantity demanded.
Price changes do not affect quantity demanded.

What describes the characteristics of a horizontal demand curve?

Price elasticity is undefined. (B) Signup and view all the answers

What happens to the slope and elasticity when moving downward and to the right along a linear demand curve?

Slope remains constant while elasticity changes. (D) Signup and view all the answers

When moving upward and to the left on a linear demand curve, how does price elasticity of demand behave?

It becomes larger. (C) Signup and view all the answers

As you move downward and to the right along a linear demand curve, total revenue experiences which of the following patterns?

It first increases then decreases. (D) Signup and view all the answers

What does the price elasticity of demand indicate for a downward-sloping demand curve?

It can vary based on the point on the curve. (B) Signup and view all the answers

Which type of good typically has a more elastic demand?

A luxury like a sports car (B) Signup and view all the answers

What characterizes the demand for a good that has many close substitutes?

The demand is elastic. (D) Signup and view all the answers

If a good is considered a luxury, how is its demand likely to respond to a price increase?

Demand will decrease significantly. (C) Signup and view all the answers

Which of the following would most likely lead to inelastic demand?

The good is a necessity such as insulin. (D) Signup and view all the answers

What does it indicate if a consumer's demand for a cup of coffee is classified as elastic?

The quantity demanded changes significantly with price changes. (D) Signup and view all the answers

In terms of demand elasticity, which scenario represents a good with more inelastic demand?

Consumption is essential and few substitutes are present. (D) Signup and view all the answers

What is a key factor influencing the elasticity of demand for Chocolate Chip Cookie Dough ice cream?

There are various other flavors available as substitutes. (B) Signup and view all the answers

If a consumer's demand for a prescription drug is described as inelastic, what does this imply?

The consumer's consumption does not change much with price increases. (A) Signup and view all the answers

What can be concluded about Joan's income elasticity of demand for hamburger based on her purchasing behavior?

Joan considers hamburger to be an inferior good. (D) Signup and view all the answers

Which statement accurately reflects the implications of an increase in income on the demand for a specific good?

Income elasticity of demand shows a positive value. (C) Signup and view all the answers

Which expression is accurately defined as cross-price elasticity of demand?

Percentage change in quantity demanded of apples divided by percentage change in price of pears. (A) Signup and view all the answers

What is a key factor that determines whether a good is normal or inferior?

The value of the income elasticity of demand for that good. (A) Signup and view all the answers

If an income elasticity of demand for a product is negative, what does this imply about the product?

The product is considered inferior. (A) Signup and view all the answers

Which of the following would most likely decrease the money demand for a certain good?

An increase in consumer income. (A) Signup and view all the answers

What effect does an increase in income have on a normal good?

It increases the quantity demanded. (A) Signup and view all the answers

When considering a good that is seen as a necessity, what would its income elasticity of demand typically be?

Positive but less than 1. (D) Signup and view all the answers

What does a perfectly elastic demand indicate about buyer behavior when the price increases?

Any rise in price above the demand curve results in zero quantity demanded. (D) Signup and view all the answers

When the price changes between $7 and $9 in the section of the demand curve labeled C, how does the quantity demanded respond?

Quantity demanded changes proportionately less than the price. (C) Signup and view all the answers

How is the demand curve represented in the case of perfectly elastic demand?

Horizontal. (C) Signup and view all the answers

In which scenario is the percent increase in price greater than the percent decrease in quantity demanded when the price increases from $8 to $10?

The percent increase in the price exceeds the percent decrease in quantity demanded. (C) Signup and view all the answers

What is the likely shape of a demand curve associated with smaller price elasticity of demand?

It will be steeper through a given point. (B) Signup and view all the answers

In the context of perfectly inelastic demand, what happens when price changes?

There is no change in quantity demanded regardless of price. (B) Signup and view all the answers

Considering two points on the demand curve, (Q = 1,000, P = $40) and (Q = 1,500, P = $30), which of the following is true?

The vertical intercept of the demand curve is the point (Q = 0, P = $60). (A) Signup and view all the answers

For two points (Q = 2,000, P = $15) and (Q = 2,400, P = $12), which scenario is plausible?

The vertical intercept of the demand curve is the point (Q = 0, P = $22). (D) Signup and view all the answers

The demand curve for perfectly inelastic demand is characterized as:

Vertical. (C) Signup and view all the answers

What effect does greater price elasticity of demand have on total revenue when price increases?

Total revenue decreases with an increase in price. (C) Signup and view all the answers

In the demand curve section labeled A, what happens when the price moves from $6 to $12?

The total revenue for sellers will likely decrease. (A) Signup and view all the answers

What characterizes the demand curve when the elasticity is greater than 1?

Demand is elastic. (D) Signup and view all the answers

Which of the following indicates a high price elasticity of demand?

A small increase in price leads to a large decrease in quantity demanded. (B) Signup and view all the answers

When evaluating price elasticity of demand at a specific point, what determines the direction of total revenue change?

The steepness of the demand curve at that point. (D) Signup and view all the answers

What occurs when moving along a demand curve from a point of elastic demand to one of inelastic demand?

The responsiveness of quantity demanded to price decreases. (B) Signup and view all the answers

What can be said about a good characterized by a vertical demand curve?

It indicates perfectly inelastic demand. (D) Signup and view all the answers

What happens to equilibrium quantity and price when demand is perfectly elastic and supply decreases?

Equilibrium quantity decreases and price is unchanged. (D) Signup and view all the answers

If Alice's demand for banana splits is said to be perfectly inelastic, what does that imply about her purchasing behavior?

She will buy the banana splits at any price. (B) Signup and view all the answers

Jean-Paul's demand for M&Ms is described as exactly 75 cents a day regardless of the price. This indicates that his demand is:

Unit elastic. (B) Signup and view all the answers

Which expression correctly represents the price elasticity of demand?

Price elasticity of demand = % change in quantity demanded / % change in price. (D) Signup and view all the answers

If you were to compute the price elasticity of demand, you would use which of the following expressions?

Price elasticity of demand = % change in quantity demanded / % change in price. (B) Signup and view all the answers

Which good would likely have the most elastic demand?

Tommy Hilfiger jeans specifically. (B) Signup and view all the answers

In the case of perfectly elastic demand, what remains constant despite fluctuations in supply?

The price at which goods are sold. (A) Signup and view all the answers

Which statement about price elasticity of demand is correct?

Unit elastic demand means the percentage change in quantity demanded matches the percentage change in price. (C) Signup and view all the answers

Elastic Demand

A demand that changes significantly in response to price.

Inelastic Demand

A demand that doesn't change much in response to price.