riu-eco-chapter 5

The price elasticity of demand measures how much

• quantity demanded responds to a change in price.

  
  

• quantity demanded responds to a change in income.

  
  

• price responds to a change in demand.

  
  

• demand responds to a change in supply.

  
  

The price elasticity of supply measures how responsive

• sellers are to a change in price.

  
  

• sellers are to a change in buyers' income.

  
  

• buyers are to a change in production costs.

  
  

• equilibrium price is to a change in supply.

  
  

Suppose good X has a negative income elasticity of demand. This implies that good X is

• a normal good.

  
  

• a necessity.

  
  

• an inferior good.

  
  

• a luxury.

  
  

If the demand for textbooks is inelastic, then a decrease in the price of textbooks will

• increase total revenue of textbook sellers.

  
  

• decrease total revenue of textbook sellers.

  
  

• not change total revenue of textbook sellers.

  
  

• There is not enough information to answer this question.

  
  

Income elasticity of demand measures how

• the quantity demanded changes as consumer income changes.

  
  

• consumer purchasing power is affected by a change in the price of a good.

  
  

• the price of a good is affected when there is a change in consumer income.

  
  

• many units of a good a consumer can buy given a certain income level.

  
  

Cross-price elasticity of demand measures how

• the price of one good changes in response to a change in the price of another good.

  
  

• the quantity demanded of one good changes in response to a change in the quantity demanded of another good

  
  

• the quantity demanded of one good changes in response to a change in the price of another good.

  
  

• strongly normal or inferior a good is.

A good will have a more inelastic demand,

• the greater the availability of close substitutes.

  
  

• the broader the definition of the market.

  
  

• the longer the period of time.

  
  

• the more it is regarded as a luxury.

  
  

If the cross-price elasticity of two goods is negative, then those two goods are

• necessities.

  
  

• complements.

  
  

• normal goods.

  
  

• inferior goods.

  
  

For a good that is a luxury, demand

• tends to be inelastic.

  
  

• tends to be elastic.

  
  

• has unit elasticity.

  
  

• cannot be represented by a demand curve in the usual way.

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

• There are many substitutes for this good.

  
  

• The good is a necessity.

  
  

• The market for the good is narrowly defined.

  
  

• The relevant time horizon is long.