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| Question | Answer |
| The ease of switching from one good to another | Substitutability |
| Why the high price for antiques? | Highly inelastic supply Limited supply Strong Demand |
| Two unrelated goods | independent |
| If two goods are substitutes, then the cross elasticity of demand will be | POSITIVE |
| The midpoint formula for calculating elasticity _____ the 2 prices and the 2 elasticizes | averages |
| The passage of _____ involved in making a decision is one determinant of the price elasticity of demand | Time |
| The ______ elasticity of demand measures the degree to which consumers respond to a change in their earnings by buying more or less of a particular good | Income |
| When consumers decrease their purchase of a good as their income rises, it is known as a(n) ________ good. | Inferior |
| The price elasticity of demand for most farm products is relatively price | Inelastic |
| Main sources of gold price fluctuations | Highly inelastic supply Shifts in demand |
| The 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 |
| If the qty supplied by producers is relatively insensitive to price changes, supply is | relatively price inelastic |
| The _____ ______ of demand measures the responsiveness or sensitivity of consumers to a price change | Price elasticity |
| The price elasticity of demand and _________ revenue are inversely related | Total |
| The proportion of income allocated to a particular good or service is a determinant of: | The price of elasticity of demand |
| Pick 2 inferior goods *Bus tickets from LA to NY *Steak *Plane ticket from LA to NY *hamburger | *Bus tickets from LA to NY *hamburger |
| The 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 demand | Midpoint |
| The % change in qty supplied divided by the % change in measures the price elasticity of _________ | Supply |
| The % change in qty demanded divided by the % change in income is the formula for the: | Income elasticity of demand |
| The % 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 |
| What is the term that indicates the total amt the seller receives from the sales of a product in a particular time period | Total Revenue |
| A _________ good is one that is demanded more as income rises | Normal |
| Luxuries v. ______ is one of the determinants of the price elasticity of demand | Necessities |
| How will the price elasticity of demand for a good that is considered to be a luxury compare to one that is a necessity | It will exhibit a price elasticity coefficient greater than one |
| Which 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 |
| Digital camera and memory sticks are what type of goods | Complementary |
| If the qty supplied by producers is relatively responsive to price changes, supply is relatively price | elastic |
| The price elasticity of demand is ______ when price and total revenue change in opposite directions | greater than one |
| In the short run, plant size _____ | is fixed |
| Which of the following products are targeted by govt legislatures for increased excise taxes? | Liquor, Gas, Cigarettes |
| The _____ the negative cross elasticity coefficient, the greater is the complementary relationship between two goods | larger |
| Product demand is generally more ______ when the time period under consideration is longer. | elastic |
| The formula for the income elasticity of demand is the % change in qty demanded _______ by the % change in consumer income. | divided |
| How many products (goods/services) are considered when referring to the cross elasticity of demand formula. | Two |
| Arguments 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 |
| The price elasticity of demand for most farm products is relatively price ________ | Inelastic |
| How 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 |
| What is the sign of the income elasticity coefficient if the good is a normal good? | Positive |
| Arguments 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 |
| Because the physical availability of gold is limited and gold production is costly, the supply of gold is | Inelastic |
| The ____________ market period is the length of time over which producers are unable to respond to a change in price with a change in qty supplied | Immediate |
| _____ in price when a product is relatively price elastic will lead to a decrease in total revenue | An increase |
| A relatively large percentage change in qty demanded divided by a relatively smaller change in price yields relatively price ______________ demand. | Elastic |
| Demand is relatively price _______ when price and total revenue move in the same direction | Inelastic |
| Which of the following would be characteristics of goods with relatively elastic demand? | *High priced goods relative to income *Luxuries |
| With a unit elastic demand, when prices changes, total revenue______ | stays constant |
| If the price elasticity of demand is inelastic, the qty demanded changes by_______ percentage than does price | a smaller |
| As you move from higher to lower prices, the price elasticity of demand | declines |
| When recessions occur in the economy, the ______ of demand help predict which products will rise or fall in demand | income elasticity |
| Demand is relatively price ____ if the percentage change in price leads to a larger percentage change in the qty demanded | elastic |
| The price elasticity coefficient of supply is ____ if greater than 1 | elastic |
| Which of the following goods and services would most likely exhibit an inelastic price elasticity of demand coefficient | *Medical Care *Auto Repairs *Milk |
| Which type of elasticity shows how responsive demand is to a change in earrings | income elasticity of demand |
| How will the price elasticity of a product that is broadly defined compare with one that is narrowly defined? | it will be less elastic |
| The price elasticity of supply is more _______in the long run than in the short run | elastic |
| Why is the supply curve more elastic in the long run that in the short run | because firms have time to adjust |
| Which 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 price | chg in qty demanded is = to % chg in price |
| When cross elasticity is _____ the goods are complementary | negative |
| Which goods/services would most likely exhibit an inelastic price elasticity of demand coefficient? *Beef, auto repairs, Medical care, milk, dining out | Auto Repairs Medical Care Milk |
| What type of demand is represented by a small chg in price that leads to a lg chg in qty demanded? | elastic |
| In the immediate market period, the _____ curve is vertical | supply |
| Which of the following would most likely exhibit an inelastic price elasticity of demand coefficient? Auto Repairs, Medical Care, Milk, Dinning Out , Beef | Auto Repairs, Medical care, milk |
| When an increase/decrease in prices does not change total revenue demand is ____ elastic | unit |
| coca cola and new balance sneakers would have a cross elasticity coefficient of | zero |
| When 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 |
| the _____ formula is used for calculating the price elasticity of demand | midpoint |
| price is most elastic in the ____ run | long |
| the price elasticity of demand is ______ when price and total revenue change in opposite directions = to 1, < 1, 1>, < 0 | greater than one |
| a small % chg in qty demanded divided by a larger % change in price results in relatively price _______ demand | inelastic |
| the cross price elasticity of demand measures | the responsiveness of consumer purchases of one product due to a change in consumer income |
| the income elasticity of demand shows the responsiveness of demand for a good/service when an individual's ______ changes | earnings |
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