Mankiw/Taylor, Economics - Chapter 04 Worksheet

If the quantity demanded of a good is sensitive to a change in the price of that good, demand is said to be price inelastic.

• True

• False

Using the midpoint method to calculate elasticity, if an increase in the price of pencils from €0.10 to €0.20 reduces the quantity demanded from 1000 pencils to 500 pencils, then the demand for pencils is unit price elast.

• True

• False

The demand for tyres should be more inelastic than the demand for Michelin brand tyres.

• True

• False

The demand for aspirin over one month should be more elastic than the demand for aspirin over one year.

• True

• False

The price elasticity of demand is defined as the percentage change in the price of that good divided by the percentage change in quantity demanded of that good.

• True

• False

If the cross-price elasticity of demand between two goods is positive, the goods are likely to be complements.

• True

• False

If the demand for a good is price inelastic, an increase in its price will increase total revenue in that market.

• True

• False

Indicate whether the sentence or statement is true or false. The demand for a necessity such as petrol tends to be elastic.

• True

• False

If a demand curve is linear, the price elasticity of demand is constant along it.

• True

• False

If the income elasticity of demand for a bus ride is negative, then a bus ride is an inferior good.

• True

• False