1. To compute the price elasticity of demand, we divide the percentage change in_______ by the percentage change in _______and then take the _______value of the ratio.
2. If a 10 percent increase in price decreases the quantity demanded by 12 percent, the price elasticity of demand is_______.
3. When the price of CDs increased from $10 to $11, the quantity of CDs demanded decreased from 100 to 80. The price elasticity of demand for CDs is_______, and demand is _______ (elastic/inelastic).
4. If demand is elastic, the percentages change in _______exceeds the percentage change in_______.
5. As the number of substitutes for a particular product increases, the price elasticity of demand for the product _______ (increases/decreases).
6. Over time, the price elasticity of demand for gasoline _______ (increases/decreases).
7. In the long run, a 20 percent increase in the price of gasoline will decrease traffic volume by _______percent and increase fuel efficiency by _______percent.
8. Demand is relatively elastic if the product has _______ (many/few) substitutes, a _______ (long/short) time passes, and the consumer spends a _______ (large/small) fraction of his or her budget on the product.