Economics - Chapter 6 Connect

25 July 2022
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The elasticity of demand for a product is likely to be greater
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the greater the amount of time over which buyers adjust to a price change.
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Suppose the price of a product rises and the total revenue of sellers increases
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No conclusion can be reached with respect to the elasticity of supply.
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Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired. GSU is assuming that the demand for education at GSU is:
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relatively inelastic
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Suppose the price elasticity coefficients of demand are 1.43, 0.67, 1.11, and 0.29 for products W, X, Y, and Z respectively. A 1 percent decrease in price will increase total revenue in the case(s) of:
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W and Y.
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(Last Word) Which of the following is not an example of pricing based on group differences in elasticity of demand?
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Cash rebates for purchases of automobiles.
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Suppose that the price of product X rises by 20 percent and the quantity supplied of X increases by 15 percent. The coefficient of price elasticity of supply for good X is:
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less than 1 and therefore supply is inelastic.
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If price and total revenue vary in opposite directions, demand is
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relatively elastic.
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If the supply of product X is perfectly elastic, an increase in the demand for it will increase:
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equilibrium quantity, but equilibrium price will be unchanged.
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Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in:
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the price of some other product.
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A supply curve that is a vertical straight line indicates that
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a change in price will have no effect on the quantity supplied
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The demand schedules for such products as eggs, bread, and electricity tend to be:
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relatively price inelastic.
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In which of the following cases will total revenue increase?
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Price rises and demand is inelastic.
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Farmers often find that large bumper crops are associated with declines in their gross incomes. This suggests that:
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the price elasticity of demand for farm products is less than 1.
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The price elasticity of supply measures how:
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responsive the quantity supplied of X is to changes in the price of X.
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(Consider This) Which of the following best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s?
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The supply of higher education is highly price inelastic and demand has increased substantially.
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If the income elasticity of demand for lard is −3.00, this means that:
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lard is an inferior good
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If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will:
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increase the quantity demanded by about 25 percent
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The Illinois Central Railroad once asked the Illinois Commerce Commission for permission to increase its commuter rates by 20 percent. The railroad argued that declining revenues made this rate increase essential. Opponents of the rate increase contended that the railroad's revenues would fall because of the rate hike. It can be concluded that
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the railroad felt that the demand for passenger service was inelastic and opponents of the rate increase felt it was elastic
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(Consider This) Elastic demand is analogous to a __________ and inelastic demand to a _________.
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Ace bandage; firm rubber tie-down
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Which of the following is not characteristic of the demand for a commodity that is elastic?
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The elasticity coefficient is less than one.
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(Last Word) Microsoft charges a substantially lower price for a software upgrade than for the initial purchase of the software. This implies that Microsoft views the demand curve for the software upgrade to be
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more elastic than the demand for the original software.
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If the price of hand calculators falls from $10 to $9 and, as a result, the quantity demanded increases from 100 to 125, then:
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demand is elastic.
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If the demand for product X is inelastic, a 4 percent increase in the price of X will:
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decrease the quantity of X demanded by less than 4 percent.
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If demand is elastic...
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a decrease in price will increase total revenue.