If the price of a good decreases and the total expenditure for a consumer on that good increases,...
Question:
If the price of a good decreases and the total expenditure for a consumer on that good increases, then:
a. the consumer surplus attached to the good has increased.
b. the consumer surplus attached to the good has decreased.
c. the price elasticity of demand for the good must be less than one.
d. the price elasticity of demand for the good must be greater than one.
Methods of Calculating Price Elasticity of Demand:
Price elasticity of demand means how the demand for a good responds to a change in the price of the good. Elasticity can be calculated by the point method, the arc method, or the total revenue method.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerIf the price of a good decreases and the total expenditure for a consumer on that good increases, then: d. the price elasticity of demand for the good...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Price Elasticity of Demand in Microeconomics
from
Chapter 2 / Lesson 11
26K
In microeconomics, the principle of price elasticity of demand is important to understand. Learn the definition of price elasticity of demand, understand the formula and its categories, and see some calculation examples.
Related to this Question
- The price of a good will increase if: a) the price of a substitute in consumption decreases. b) supply of the good decreases. c) demand for the good decreases. d) there is a surplus of the good. e) it is an inferior good and income increases.
- If supply increases, _____. a. consumer surplus decreases b. the marginal cost of producing the product increases c. the marginal utility (benefit) of consuming the product increases d. consumer surplus is unchanged e. consumer surplus increases
- The price elasticity of demand for a good is -2.0. When the price of this good rises, what occurs? \\ A) Quantity demanded will rise as well B) The income of those who buy the good will increase C) Total expenditure on this good will fall. D) All of t
- Which of the following will not cause an increase in demand for good X? A) a decrease in income if good X is an inferior good. B) an increase in income if good X is a normal good. C) a decrease in the price of good X. D) an increase in consumers' tast
- The price of goods will rise if ________. (a) supply of the good decreases (b) the price of a substitute for the good decreases (c) demand for the good decreases (d) there is a surplus of the good (e) the good is an inferior good and income increases.
- Total revenue will decrease, as the price of a good falls, if the price elasticity of demand for the good is: a. Elastic demand and the elasticity is greater than 1. b. Inelastic demand and the elasticity is greater than 1. c. Unit elastic demand. d. P
- If the price elasticity of demand is elastic, then: a. Ed less than 1. b. consumers are not very responsive to a price increase. c. an increase in the price will increase total revenue. d. there are a large number of substitute products available.
- A normal good is a good for which demand increases as the: a. income of demanders increases. b. price of the good increases. c. price of close substitutes decreases. d. the total number of consumers decreases.
- If the price elasticity of demand for a product is greater than 1, then a. higher prices will increase demand for the good. b. consumers are relatively responsive to price changes. c. higher prices will reduce demand for the good. d. higher prices wil
- The price elasticity of demand for a good is -2.0. When the price of this good rises, what occurs? a. Quantity demanded will rise as well. b. The income of those who buy the good will increase. c. Total expenditure on this good will fall. d. All of the ab
- A 60% increase in price causes the quantity demanded of a good to decrease by 30%, while the total revenue of that good increases by 15%. The value for the price elasticity of demand is, and demand is. a. -0.5, elastic b. -0.5, inelastic c. -2, inelastic
- An increase in consumer incomes will: a. Increase the demand for an inferior good b. Increase the supply of an inferior good c. Increase the demand for a normal good d. Decrease the supply of a normal good
- If the price elasticity of demand for good X is equal to 0.4, then an increase in price will cause total expenditure on good X to? A) increase. B) remain constant. C) decrease. D) fall to zero. E) be negative.
- If a firm decreases the price of a good and total revenue decreases, then A. the demand for this good is price elastic. B. the demand for this good is price inelastic. C. the cross-price elasticity is negative. D. the income elasticity is less than 1.
- A consumer spends all of her income on only one good. a) What is the income elasticity of demand for this good? b) What is the own price elasticity of demand for this good?
- What happens when the price of good increases holding everything else constant? a. Product surplus decreases. b. Consumer surplus decreases. c. Producer and consumer surplus are unchanged. d. Consumer surplus increases.
- For a given linear demand curve, a decrease in supply due to an increase in the price of an input will result in A. an increase in producer surplus. B. an increase in consumer surplus. C. an increase in total surplus. D. a decrease in both consumer and pr
- If A is an inferior good and consumer income rises, the demand for A will: a) decrease, and thus the price and the equilibrium quantity will decrease. b) decrease, and thus the price will rise; as a result, the equilibrium quantity will decrease. c) incre
- Along a given supply curve, an increase in the price of a good will: a. decrease producer surplus. b. decrease producer surplus and increase consumer surplus. c. increase consumer surplus. d. increase producer surplus.
- Something is a normal good if the demand for the good A. increases as the consumer's income increases. B. increases as the consumer's income decreases. C. increases if the price of a complement good increases. D. increases if the price of a complement goo
- If the elasticity of demand for Good A is -3, a 33% decrease in quantity demanded of Good A results from a(n): a. 99% decrease in the price of Good A. b. 99% increase in the price of Good A. c. 11% decrease in the price of Good A. d. 11% increase in
- The price elasticity of demand tends to be higher for goods a. For which the consumer spends a high percentage of his or her income b. That are in scarce supply c. For which the consumer spends a low
- If a rise in the price of good 1 decreases the quantity of good 2 demanded, \\ a. the cross elasticity of demand is negative b. good 1 is an inferior good. c. good 2 is an inferior good d. the cross elasticity of demand is positive
- If the price elasticity of demand for a good is less than one in absolute value, economists would characterize consumers of this good _.
- If the price of a good increases and the total revenue also increases, the good has a(n): a) inelastic demand. b) perfectly elastic demand. c) elastic demand. d) unit elastic demand.
- Other things held constant, consumer surplus decreases as: a. the price of a good decreases. b. the price of a good increases. c. the supply curve shifts to the right. d. none of the above
- If a 5% reduction in the price of a good produces a 3% increase in the quantity demanded, the price elasticity of demand over this range of the demand curve is: a. elastic b. perfectly elastic c. unitary elastic d. inelastic e. perfectly inelastic
- Suppose the own price elasticity of demand for good x is -3, its income elasticity is 2, and the cross price elasticity of demand between good x and y is -5. Determine how much the consumption of this good will change if: a) The price of good x increases
- If the price elasticity of demand is -0.5, a 10% increase in price will _____. a. Lead to an increase in the total dollars spent on the good by consumers b. Lead to a decrease in the total dollars spent on the good by consumers. c. Lead to no change in th
- If the demand equation for a good is QD = 800 - 2P and price decreases from $125 to $100, then consumer surplus increases by: a. $137,500 b. $90,000 c. $14,375 d. Consumer surplus will decrease wh
- Consumer surplus: a. is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price b. is the difference between the maximum prices consumers a
- If total revenue increases as a result of a price increase: A. the good is price elastic. B. the good is price inelastic. C. the good is price unit elastic. D. Any of these could be true.
- A rise in the price of a good result in an increase in expenditure on it. Is its demand elastic or inelastic?
- If the price of good X rises, then the resulting decrease in the consumer's quantity demanded will the consumer's total utility from consuming X and the consumer's marginal utility from that last unit of X consumed.
- A good is inelastic if: A. total revenue increases as a result of a price increase. B. the quantity effect outweighs the price effect of a price increase. C. the measured elasticity is greater than 1. D. None of these is true.
- Consumer surplus is the: a. quantity of a good consumers get without paying anything. b. amount a consumer pays minus the amount the consumer is willing to pay. c. amount a consumer is willing to pay minus the amount the consumer pays. d. value of a good
- The own price elasticity of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is -6.Determine how much the consumption of this good will change if: a. The
- If A is an inferior good and consumer income rises, the demand for A? A) Decreases and the equilibrium price and the equilibrium quantity decrease. B) Decreases and the equilibrium price falls but the equilibrium quantity increases. C) Increases and the
- Suppose the price of a good increases. If the percent increase in price is less than the percent decrease in quantity consumed in absolute terms, then we know the good: a) is a substitute good. b) is a complementary good. c) has an elastic demand. d)
- A (decrease/increase) in the market price results in an increase in consumer surplus and a decrease in producer surplus.
- Everything else remaining unchanged, an increase in the supply of a good will lead to: a. a fall in price and an increase in consumption of the good. b. an increase in the cost of production of the good. c. an increase in the price of the good. d. a leftw
- If a 2% decrease in the price of a good leads to a 6% increase in the quantity demanded, the price elasticity of demand for the good equals _____.
- If the elasticity of demand for Good A is -3, a 33% decrease in quantity demanded of Good A results from a(n): a. 33% decrease in the price of Good A. b. 11% decrease in the price of Good A. c. 11% increase in the price of Good A. d. 99% increase in the p
- If the market for a good is in equilibrium at a price of $20, what is true about consumer surplus? Consumers enjoy surplus equal to $20 per unit on all units of the good consumed. Consumer surplus is
- Suppose the own-price elasticity of demand for good X is -4, its income elasticity is 2, its advertising elasticity is 3, and the cross-price elasticity of demand between good X and good Y is -3. Determine how much the consumption of this good will change
- If the price of a good increases from $20 to $25 and the quantity demanded of a good decreases from 100 to 90, what is the elasticity of demand? Is the demand elastic, unit elastic, or inelastic? Use
- If a 5 percent reduction in the price of a good produces a 3 percent increase in the quantity demanded, the price elasticity of demand over this range of the demand curve is a. elastic. b. perfectly elastic. c. unitary elastic. d. inelastic. e. perfectly
- The current price for a good is $25 and 90 units are demanded at that price. The price elasticity of demand for the good is -1. By how much does the consumer surplus increase or decrease, when the pri
- If a 4 percent decrease in income (at a constant price) results in a 2 percent decrease in the consumption of dweedles then: A) dweedles are a necessity and a normal good. B) dweedles are an inferior good. C) the income elasticity of demand for dweedle
- The price elasticity of demand for a good measures the willingness of: a. consumers to buy less of the good as price rises. b. consumers to avoid monopolistic markets in favor of competitive markets. c. firms to produce more of a good as price rises. d
- If the price of a good decreases by 5 percent and total revenue does not change, then the price elasticity of demand is A. equal to 0.05. B. perfectly elastic. C. perfectly inelastic. D. equal to 1.05. E. unit-elastic.
- When a 10% increase in income causes a 4% increase in quantity demanded of a good: a. The price elasticity of demand is 0.4 and the good is an inferior good, b. The income elasticity is 2.5 and the good is a normal good, c. The income elasticity is 0.4 a
- A(n) (decrease/increase) in the market price results in an increase in producer surplus and a decrease in consumer surplus.
- If the government imposes a price ceiling that is lower than the market clearing price, then A. both consumer surplus and producer surplus will increase. B. both consumer surplus and producer surplus will decrease. C. consumer surplus will decrease while
- The aggregate demand curve slopes downward because: a. a higher price level reduces wealth. b. all demand curves slope downward. c. as price rises, consumers substitute cheaper goods for more expensive goods. d. a higher price level will increase purc
- The price for a good decreases by 4 percent. As a result, the quantity demanded increases by 12 percent. What is the price elasticity of demand?
- The demand curve for a typical good has a(n): a. negative slope because some consumers switch to other goods as the price rises. b. negative slope because consumer incomes fall as the price of the good rises. c. negative slope because the good has less
- A good is inelastic if A. total revenue increases as a result of a price increase. B. the quantity effect outweighs the price effect of a price increase. C. the measured elasticity is greater than 1. D. None of these
- Price rises 12% proportionately; consumers decrease purchases by 9%. The elasticity is: a. 1.33 and demand is inelastic. b. 0.75 and demand is inelastic. c. 0.75 and demand is elastic. d. 1.33 and demand is elastic.
- The demand for a good is price inelastic if A. a rise in price results in a decrease in total revenue. B. a rise in price results in an increase in total revenue. C. an increase in income results in a decrease in total revenue. D. the good is a luxury. E.
- Suppose the own price elasticity of demand for good X is -3, its income elasticity is -3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is 2. Determine how much the consumption of this good will change in
- Suppose the own price elasticity of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Y is -4. Determine how much the consumption of this good will change
- 1) If a good has a price elasticity of demand of -3, it implies that: If the price of the good increases by 1%, the quantity demanded of the good will decrease by 3%. If the price of the good increases by 3%, the quantity demanded of the good will incre
- If the price elasticity of demand for a good is 2, then a 10 percent decrease in the quantity demanded must be the result of - a 0.2 percent increase in the price. - a 2.5 percent increase in the price. - a 5 percent increase in the price. - a 20 perc
- At a price of $5, consumers buy 200 units of good X. When the price falls to $4, quantity demanded increases to 250 units. We can conclude that over this range, demand is: A) inelastic. B) unit elastic. C) perfectly inelastic. D) elastic.
- Suppose the own-price elasticity of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Y is -4. Determine how much the consumption of this good, will change if
- Income elasticity of demand measures how: a. the quantity demanded changes as consumer income changes. b. consumer purchasing power is affected by a change in the price of a good. c. the price of a good is affected when there is a change in consumer incom
- If the price of good A decreases by 5% and the quantity demanded of good B increases by 10.2%, find the cross-price elasticity of demand. Are the goods substitutes or complements? Why?
- If a 10% increase in the price of good Y brings forth a 25% increase in the quantity demanded good X, then the cross-price elasticity of demand is equal to _____, and good Y and good X are ____. a. 2.5; substitutes b. 0.4; substitutes c. unit-elastic;
- Suppose the own-price elasticity of demand for good X is -3, its income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Y is -4. Determine how much the consumption of this good will change if:
- Suppose the own price elasticity of demand for good X is -5, its income elasticity is 2, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is 3. Determine how much the consumption of this good will change if:
- Suppose the own price elasticity of demand for good X is -4, its income elasticity is 3, its advertising elasticity is 3, and the cross-price elasticity of demand between it and good Y is 5. Determine how much the consumption of this good will change if:
- Suppose the own-price elasticity of demand for good X is -3, its income elasticity is -2, its advertising elasticity is 3, and the cross-price elasticity of demand between it and good Y is -5. Determine how much the consumption of this good will change i
- The price elasticity of a demand for a good is -0.94, the cross-price elasticity is 1.94, the income elasticity is 1.23, and consumers currently purchase 1,318 units of the good. Find the change in un
- If a 5% increase in consumer incomes leads to a 10% increase in the quantity demanded for a good, the good is a(n) _____ good with an income elasticity of _____.
- The price of good X increases by 1% causing good Y to increase by 20%. What is the cross-price elasticity for good Y, with respect to good X? (20, -20, 0.05, -0.05) What are the two goods? (Substit
- The current price for a good is $20, and 100 units are demanded at that price. The price elasticity of demand for the good is -1.5. When the price of the good drops by 10 percent to $18, consumer surplus (increases/decreases) by $_____.
- Consumer surplus is equal to: a. the area under the demand curve. b. the area under the demand curve above the good's price. c. the area under the demand curve below the good's price.
- If the price elasticity of demand of a product is -5, and the income elasticity of demand for the product is 2.5. If a 0.5 % decrease in product price is accompanied by a 1% decrease in consumer income, the firm's total sales will be?
- Price elasticity for a good depends on the share of a consumer's budget spent on a good. Other things being equal, which of the following goods has the most elastic demand? 1.Computer 2. Salt 3. La
- At a price of $5, consumers buy 200 units of good X. When the price falls to $4, quantity demanded increases to 250 units. We can conclude that over this range, demand is: A) unit elastic. B) inelastic. C) elastic. D) perfectly inelastic.
- If the price elasticity of demand for a good is 0.8, then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded? a. A 0.2 percent increase in the price of the good, b. A 3.2 percent increase in the pri
- If the price elasticity of demand for a good is 0.94, then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded? a. a 0.235 percent increase in the price of the good. b. a 2.350 percent increase in t
- If consumer income increases, then a. the quantity demanded at any price will decrease. b. the marginal utility of normal products will increase. c. consumers will move toward a new equilibrium in the quantities of products purchased. d. the demand fo
- Suppose Good A has the following elasticities: Price elasticity of demand = 2.5 Income elasticity of demand = 0.75 Cross price elasticity of demand to Good B = 1.5 a) If the price of Good A increases
- The cross elasticity of demand for good X with respect to the price of good Y is negative. X is a normal good and Y is an inferior good. The supply of good X is perfectly elastic. A rise in income the equilibrium price of good X. a. might raise or lower b
- A price change causes the quantity demanded of a good to decrease by 30 percent, while the total revenue of that good increases by 15 percent. Is the demand curve elastic or inelastic?
- A price change causes the quantity demanded of a good to decrease by 30 percent while the total revenue of that good increases by 15 percent. Is the demand curve elastic or inelastic? Why?
- a) If the income elasticity of demand for a good is negative, that good is called a _________ good. b) The same price elasticity of demand for a good is always _________ since demand curves slope downward. c) If the income elasticity of demand for a good
- A price change causes the quantity demanded of a good to decrease by 30%, while the total revenue of that good increases by 15%. Does this mean the demand curve is elastic or inelastic?
- If the government imposes a price ceiling on a good that is below the market equilibrium price, A. a surplus will develop. B. a shortage will develop. C. producers will reduce their sales price. D. consumers will reduce their demand for the good.
- Which of the following would not cause market demand for a normal good to decline? a. An increase in the price of a complement b. An increase in the price of a substitute c. A decline in consumer income d. Consumer expectations that the good will go on
- Suppose that the own price elasticity of market demand for good 1 is -2. Suppose that the supply of good 1 increases by 4%. Consumer incomes and the prices of all other goods remain the same.
- The percentage change in the quantity demanded of a good due to a percentage change in its price is referred to as the: A. consumer surplus. B. price elasticity of demand. C. shadow price of the good. D. price multiplier.
- When a 5% increase in income causes a 3% drop in quantity demanded of a good: a. the income elasticity is 0.6 and the good is an inferior good. b. the cross-price elasticity is 0.6 and the good is an inferior good. c. the income elasticity is 1.67 and th
- If the price of a good increases by 8% and the quantity demanded decreases by 12%, what is the price elasticity of demand? Is it elastic, inelastic, or unitary elastic?
- Consumer?s surplus and price changes 1. The change in total consumer's surplus or the total consumer's surplus 2. is 280. is 200. Changes from 280 to 200. Changes from 200 to 280.Consumer's surplus an
- Suppose the own-price elasticity of demand for good __X__ is -3, its income elasticity is 1, its advertising elasticity is -2 and the cross-price elasticity of demand between its good __Y__ is -4. Determine how much the consumption of this goodwill change
- According to the law of demand, if the price of a good increases: a. consumers will want to buy more of the good because it is more valuable. b. demand for the good will decrease. c. the quantity that consumers would be willing to purchase will decrease.
- The consumer is said to be at a point of saturation when: A. Marginal utility of a commodity is greater than the price of the commodity. B. The extra amount of money a consumer is willing to pay for an additional consumption equates to the prices of each
Explore our homework questions and answers library
Browse
by subject