4. MICRO-CH-5

If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for that good is

• price inelastic

• price elastic

• unit price elastic

• income inelastic

• income elastic

The price elasticity of demand is defined as

• the percentage change in price of a good divided by the percentage change in the quantity demanded of that good.

• the percentage change in income divided by the percentage change in the quantity demanded.

• the percentage change in the quantity demanded of a good divided by the percentage change in the price of that good.

• the percentage change in the quantity demanded divided by the percentage change in income.

• None of the answers is correct.

In general, a flatter demand curve is more likely to be

• price elastic.

• price inelastic.

• unit price elastic.

• None of the answers is correct.

In general, a steeper supply curve is more likely to be

• price elastic.

• price inelastic.

• unit price elastic.

• None of the answers is correct.

Which of the following would make a demand curve for a good to be price inelastic?

• There are a great number of substitutes for the good.

• The good is inferior.

• The good is a luxury.

• The good is a necessity.

The demand for which of the following is likely to be the most price inelastic?

• airline tickets

• bus tickets

• taxi rides

• transportation

If the cross-price elasticity between two goods is negative, the two goods are likely to be

• luxuries

• necessities

• complements

• substitutes

If a supply curve for a good is price elastic, then

• the quantity supplied is sensitive to changes in the price of that good.

• the quantity supplied is insensitive to changes in the price of that good.

• the quantity demanded is sensitive to changes in the price of that good.

• the quantity demanded is insensitive to changes in the price of that good.

• None of the answers is correct.

If a fisherman must sell all of his daily catch before it spoils for whatever price he is offered, once the fish are caught, the fisherman's price elasticity of supply for fresh fish is

• zero

• one

• infinite

• impossible to be determined from this information

A decrease in supply (shift to the left) will increase total revenue in that market if

• supply is price elastic

• supply is price inelastic

• demand is price elastic

• demand is price inelastic