Chapter 3: Elasticity

Question 1

A life-saving medicine without any close substitutes will tend to have:

Answer 1

A small elasticity of demand

Question 2

The price of a good rises from $8 to $12, and the quantity demanded falls from 110 to 90 units. Calculated with the midpoint method, the elasticity is:

Answer 2

1/2

Question 3

A linear, downward-sloping demand curve is

Answer 3

inelastic at some points and elastic at others

Question 4

The ability of firms to enter and exit a market over time means that, in the long run,

Answer 4

the supply curve is more elastic

Question 5

An increase in the supply of a good will decrease the total revenue producers receive if

Answer 5

the supply curve is inelastic