Elasticities of Demand and Supply

2. 5 Elasticities of Demand and Supply CLICKER QUESTIONS

3. Checkpoint 5.1 Checkpoint 5.2 Checkpoint 5.3 Question 1 Question 4 Question 7 Question 2 Question 5 Question 8 Question 3 Question 9 Question 6 Question 10

4. CHECKPOINT 5.1 Question 1 The demand for a good is elastic if • consumers respond strongly to changes in the price of the good. • a large percentage change in price brings about a small percentage change in quantity demanded. • a small percentage change in price brings about a small percentage change in quantity demanded. • the quantity demanded is not responsive to price changes. • a change in the quantity demanded brings a small change in the price of the good.

5. CHECKPOINT 5.1 Question 2 The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 bags to 60 bags. The price elasticity of demand for pretzels is ________. • 1.0 • 1.25 • 40.0 • 20.0 • 0.80

6. CHECKPOINT 5.1 Question 3 When a firm raises the price of its product, the firm’s total revenue _________. • decreases if demand for its product is unit elastic • increases if demand for its product is unit elastic • decreases if demand for its product is inelastic • increases if demand for its product is elastic • decreases if demand for its product is elastic

7. CHECKPOINT 5.2 Question 4 If when the price of a good rises by 10 percent, the quantity supplied of the good increases by 5 percent, then the elasticity of supply is ________. • exceeds 1 and the supply of the good is elastic • negative and the supply of the good is inelastic • less than 1 and the supply of the good is elastic • less than 1 and the supply of the good is inelastic • exceeds 1 and the supply of the good is inelastic

8. CHECKPOINT 5.2 Question 5 The greater the amount of time that passes after the price of a good changed, the ___________ of that good becomes. • less elastic the supply • more elastic the supply • more negative the supply • steeper the supply curve • more inelastic the supply

9. CHECKPOINT 5.2 Question 6 The supply of beachfront property on St. Simon’s Island is ________. • elastic • unit elastic • negative • inelastic • perfectly elastic

10. CHECKPOINT 5.3 Question 7 To determine whether two goods are complements or substitutes, economists use the _______. • price elasticity of supply • cross elasticity of demand • price elasticity of demand • income elasticity of demand • substitute elasticity of demand

11. CHECKPOINT 5.3 Question 8 The income elasticity of demand for used cars is less than zero. So, used cars are _____. • a good with an inelastic demand • a normal good • an inferior good • a perfectly inelastic good • substitute goods

12. CHECKPOINT 5.3 Question 9 • When income increases by 6 percent, the demand for potatoes decreases by 2 percent.The income elasticity of demand for potatoes equals _____. • 2.00. • 3.00. • 3.00. • 0.33. • 0.33.

13. CHECKPOINT 5.3 Question 10 If two goods have a cross elasticity of demand of 2, then when the price of one good increases, the demand for the other good _________ and the two goods are ______. • increases; complements • decreases; complements • remains unchanged; complements • might increase or decrease; substitutes • decreases; substitutes