MICRO CH 6, 7, 9

A perfectly inelastic demand schedule:

• rises upward and to the right, but has a constant slope.

• can be represented by a line parallel to the vertical axis.

• cannot be shown on a two-dimensional graph.

• can be represented by a line parallel to the horizontal axis.

Price elasticity of supply is:

• positive in the short run but negative in the long run

• greater in the long run than in the short run.

• greater in the short run than in the long run.

• independent of time.

Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in:

• the price of some other product.

• the price of that same product.

• income.

• the general price level.

A consumer's demand curve for a product is downsloping because:

• total utility falls below marginal utility as more of a product is consumed.

• marginal utility diminishes as more of a product is consumed.

• time becomes less valuable as more of a product is consumed.

• the income and substitution effects precisely offset each other.

Marginal utility can be:

• positive, but not negative.

• positive or negative, but not zero.

• positive, negative, or zero.

• decreasing, but not negative.

Marginal utility is the:

• sensitivity of consumer purchases of a good to changes in the price of that good.

• change in total utility obtained by consuming one more unit of a good.

• total utility associated with the consumption of a certain number of units of a good divided by the number of units consumed.

• change in total utility obtained by consuming another unit of a good divided by the change in the price of that good.

Demand is said to be inelastic when:

• The elasticity coefficient exceeds one

• The elasticity coefficient equals one

• The elasticity coefficient is less than one

• An increase in price results in a reduction in total revenue

The total utility of a product is calculated by:

• summing the marginal utility from the first unit of a product that is consumed and the last unit of a product that is consumed.

• multiplying the marginal utility of a unit of the product consumed times the average quantity consumed.

• summing the marginal utilities for each successive unit of the product that is consumed.

• multiplying price times quantity and dividing by the marginal utility.

A product has utility if it:

• takes more and more resources to produce successive units of it.

• violates the law of demand.

• is useful.

• satisfies consumer wants.

The basic formula for the price elasticity of demand coefficient is

• absolute decline in quantity demanded/absolute increase in price.

• percentage change in quantity demanded/percentage change in price.

• absolute decline in price/absolute increase in quantity demanded.

• percentage change in price/percentage change in quantity demanded.