2.3 AP ECON Elasticities

Supply is inelastic.

A percentage increase in price will lead to a relatively smaller percentage increase in quantity supplied.

The supply curve is downward sloping with respect to the price of output.

A 10 percent decrease in price will decrease the quantity supplied by 30 percent.

A 3 percent increase in price will decrease the quantity supplied by 10 percent.

X

Y

Z

The elasticity is the same for all points.

The relative elasticity cannot be determined with the given information.

The value of the price elasticity of supply is 2.

The value of the price elasticity of supply is 0.5.

Supply is price inelastic.

Demand is price elastic.

This price-quantity combination violates the law of supply.

3 percent decrease in the quantity demanded of good K

15 percent decrease in the quantity demanded of good K

6 percent increase in the quantity demanded of good J

12 percent increase in the quantity demanded of good J

60 percent increase in the quantity demanded of good J

A positive value for the income elasticity coefficient indicates an inferior good.

If good X and good Y have negative income elasticities, then both goods are substitutes.

With an income elasticity coefficient of 0.6, the demand is inelastic and the good is an inferior good.

With an income elasticity coefficient of 5, a 10 percent increase in income will lead to a 50 percent increase in the quantity demanded of the good.

With an income elasticity coefficient of -1.2, a 10 percent increase in income will lead to a 12 percent decrease in the price of the good.

Good Z is a normal good.

Good Z must have an inelastic demand.

An increase in income will lead to a decrease in demand.

An increase in income will lead to an increase in demand.

The income effect of a price increase will be a decrease in quantity demanded at every price.