# Microeconomics chapter 6-10

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D. Hammond Microeconomics 201

2.6

### When price goes down, the quantity demanded goes up. Price elasticity measures how:

responsiveness the quantity change is in relation to the price change.

0.75

### Using the midpoint method of elasticity to calculate the price elasticity of demand eliminates the problem of computing:

different elasticities, depending on whether pricedecreases or increases.

0.5

### The price elasticity of demand is computed as the percentage change in:

Quantity demanded divided by the percentage change in price.

0.2; inelastic

10%;fall

1/3

Always negative

price inelastic

### You manage a popular nightclub and lately revenues have been disappointing. Your bouncer suggests that raising drink prices will increase revenues, but your bartender suggests that decreasing drink prices will increase revenues. You arent sure who is right but you do know that:

Your bouncer thinks the demand for drinks is inelastic, while your bartender thinks the demand for drinks is elastic.

Price inelastic

### On a linear demand curve:

demand is elastic at high prices.

### If an increase in the price of a good leads to an increase in total revenue, then:

the demand curve must be price inelastic.

### The price elasticity of a good will tend to be greater:

The longer the relevant time period.

Greater than 0

less than 0

### The percent change in quantity demanded divided by the percentage in income, all other things unchanged, is:

Income elasticity of demand

Normal Good

Inferior Good

### When demand for foods low in carbs began to increase, in the short run the price elasticity of supply was lower than it will be in the long run. This is because:

In the short run, some food producers did not have as much time to produce low-carb foods as they will in the long run.

Price -elastic

### If the price elasticity of supply is greater than 1, then:

Supply is price elastic

### The price elasticity of supply is computed as the percentage change in:

Quantity supplied divided by the percentage change in price.

### The supply curve for a good will be more elastic if:

production inputs are readily available at a relatively low cost.

2.2

Inelastic

### If the price elasticity of supply is greater than 1:

Supply is price elastic.

Example: