Flashcards
Chapter 6
Cards in this deck (71)
- 1The ease of switching from one good to anotherSubstitutability
- 2Why the high price for antiques?Highly inelastic supply
Limited supply
Strong Demand - 3Two unrelated goodsindependent
- 4If two goods are substitutes, then the cross elasticity of demand will bePOSITIVE
- 5The midpoint formula for calculating elasticity _____ the 2 prices and the 2 elasticizesaverages
- 6The passage of _____ involved in making a decision is one determinant of the price elasticity of demandTime
- 7The ______ elasticity of demand measures the degree to which consumers respond to a change in their earnings by buying more or less of a particular goodIncome
- 8When consumers decrease their purchase of a good as their income rises, it is known as a(n) ________ good.Inferior
- 9The price elasticity of demand for most farm products is relatively priceInelastic
- 10Main sources of gold price fluctuationsHighly inelastic supply
Shifts in demand - 11The formula for the cross elasticity of demand is written as: the % change in the qty demanded of one product _____ by the % change in the price of another product**divided**
Exy=
%of chg in qty demanded of prod X ______________________________________
% of chg in price of prod Y - 12If the qty supplied by producers is relatively insensitive to price changes, supply isrelatively price inelastic
- 13The _____ ______ of demand measures the responsiveness or sensitivity of consumers to a price changePrice elasticity
- 14The price elasticity of demand and _________ revenue are inversely relatedTotal
- 15The proportion of income allocated to a particular good or service is a determinant of:The price of elasticity of demand
- 16Pick 2 inferior goods *Bus tickets from LA to NY *Steak *Plane ticket from LA to NY *hamburger*Bus tickets from LA to NY
*hamburger - 17The change in qty, divided by the avg of qty 1 and wty 2, divided by the change in price divided by the avg of price 1 and price 2 is known as the ______ formula or approach for the price elasticity of demandMidpoint
- 18The % change in qty supplied divided by the % change in measures the price elasticity of _________Supply
- 19The % change in qty demanded divided by the % change in income is the formula for the:Income elasticity of demand
- 20The % change in qty demanded of good X divided by the % change in the price of product Y is known as the:Cross elasticity of demand
- 21What is the term that indicates the total amt the seller receives from the sales of a product in a particular time periodTotal Revenue
- 22A _________ good is one that is demanded more as income risesNormal
- 23Luxuries v. ______ is one of the determinants of the price elasticity of demandNecessities
- 24How will the price elasticity of demand for a good that is considered to be a luxury compare to one that is a necessityIt will exhibit a price elasticity coefficient greater than one
- 25Which of the following are viable arguments against the legalization of illegal drugs*Overall demand for cocaine and heroin is more elastic than proponents think
*Removal of legal prohibitions against using drugs might make drug use more socially acceptable - 26Digital camera and memory sticks are what type of goodsComplementary
- 27If the qty supplied by producers is relatively responsive to price changes, supply is relatively priceelastic
- 28The price elasticity of demand is ______ when price and total revenue change in opposite directionsgreater than one
- 29In the short run, plant size _____is fixed
- 30Which of the following products are targeted by govt legislatures for increased excise taxes?Liquor, Gas, Cigarettes
- 31The _____ the negative cross elasticity coefficient, the greater is the complementary relationship between two goodslarger
- 32Product demand is generally more ______ when the time period under consideration is longer.elastic
- 33The formula for the income elasticity of demand is the % change in qty demanded _______ by the % change in consumer income.divided
- 34How many products (goods/services) are considered when referring to the cross elasticity of demand formula.Two
- 35Arguments against legalization of illegal drugs?*Overall demand for cocaine and heroin is more elastic than proponents think
*Removal of legal prohibition against using drugs might make drug use more socially acceptable - 36The price elasticity of demand for most farm products is relatively price ________Inelastic
- 37How is a buyer’s responsiveness to price changes measured?A buyer’s responsiveness to price changes is measured by the price elasticity of demand coefficient
- 38What is the sign of the income elasticity coefficient if the good is a normal good?Positive
- 39Arguments in favor of legalizing illegal drugs*Drugs should be treated like alcohol and regulated for purity
*Current was on drugs = unsuccessful
*Legalization would reduce drug trafficking - 40Because the physical availability of gold is limited and gold production is costly, the supply of gold isInelastic
- 41The ____________ market period is the length of time over which producers are unable to respond to a change in price with a change in qty suppliedImmediate
- 42_____ in price when a product is relatively price elastic will lead to a decrease in total revenueAn increase
- 43A relatively large percentage change in qty demanded divided by a relatively smaller change in price yields relatively price ______________ demand.Elastic
- 44Demand is relatively price _______ when price and total revenue move in the same directionInelastic
- 45Which of the following would be characteristics of goods with relatively elastic demand?*High priced goods relative to income
*Luxuries - 46With a unit elastic demand, when prices changes, total revenue______stays constant
- 47If the price elasticity of demand is inelastic, the qty demanded changes by_______ percentage than does pricea smaller
- 48As you move from higher to lower prices, the price elasticity of demanddeclines
- 49When recessions occur in the economy, the ______ of demand help predict which products will rise or fall in demandincome elasticity
- 50Demand is relatively price ____ if the percentage change in price leads to a larger percentage change in the qty demandedelastic
- 51The price elasticity coefficient of supply is ____ if greater than 1elastic
- 52Which of the following goods and services would most likely exhibit an inelastic price elasticity of demand coefficient*Medical Care
*Auto Repairs
*Milk - 53Which type of elasticity shows how responsive demand is to a change in earringsincome elasticity of demand
- 54How will the price elasticity of a product that is broadly defined compare with one that is narrowly defined?it will be less elastic
- 55The price elasticity of supply is more _______in the long run than in the short runelastic
- 56Why is the supply curve more elastic in the long run that in the short runbecause firms have time to adjust
- 57Which is true when demand is unit elastic? *% chg in qty demanded is = to % chg in price *% in qty demanded is > the % of chg in price *The % qty demanded is < the % chg in pricechg in qty demanded is = to % chg in price
- 58When cross elasticity is _____ the goods are complementarynegative
- 59Which goods/services would most likely exhibit an inelastic price elasticity of demand coefficient? *Beef, auto repairs, Medical care, milk, dining outAuto Repairs
Medical Care
Milk - 60What type of demand is represented by a small chg in price that leads to a lg chg in qty demanded?elastic
- 61In the immediate market period, the _____ curve is verticalsupply
- 62Which of the following would most likely exhibit an inelastic price elasticity of demand coefficient? Auto Repairs, Medical Care, Milk, Dinning Out , BeefAuto Repairs, Medical care, milk
- 63When an increase/decrease in prices does not change total revenue demand is ____ elasticunit
- 64coca cola and new balance sneakers would have a cross elasticity coefficient ofzero
- 65When the price elasticity of demand is elastic, the % chg in qty demanded exceeds the % chg in price. What is the value of the elasticity coefficient?Greater than one
- 66the _____ formula is used for calculating the price elasticity of demandmidpoint
- 67price is most elastic in the ____ runlong
- 68the price elasticity of demand is ______ when price and total revenue change in opposite directions = to 1, < 1, 1>, < 0greater than one
- 69a small % chg in qty demanded divided by a larger % change in price results in relatively price _______ demandinelastic
- 70the cross price elasticity of demand measuresthe responsiveness of consumer purchases of one product due to a change in consumer income
- 71the income elasticity of demand shows the responsiveness of demand for a good/service when an individual's ______ changesearnings
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- not applicable Micro Economics Flashcards on Chapter 6, created by mcparada on 02/03/2016.
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