practice test 5 - A measure of sensitivity or...

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Sheet1 Page 1 A measure of sensitivity or responsiveness to changes in price or income is called Correct Answer: elasticity. A horizontal supply curve Correct Answer: is perfectly elastic. A vertical demand curve Correct Answer: is perfectly inelastic. A vertical supply curve that reflects a fixed supply Correct Answer: is perfectly inelastic. A demand curve of unit elasticity is in the shape of a Correct Answer: rectangular hyperbola. A change in demand is caused by all but which one of the following? Correct Answer: A shift in the supply curve. A normal good has a coefficient of income elasticity of demand that is Correct Answer: positive. A perfectly elastic demand curve Correct Answer: has a coefficient of price elasticity equal to infinity. Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicyc e Correct Answer:elastic, and total revenue will increase. Demand is inelastic when
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This note was uploaded on 09/12/2011 for the course ECONOMICS 1110 taught by Professor Pavur during the Spring '10 term at University of Texas at Austin.

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practice test 5 - A measure of sensitivity or...

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