Question

5. Identify how total revenue changes if Demand is inelastic and price falls; a. Total revenue falls b. Total revenue rises c. Total revenue remains constant d. None of the above

6. Identify how total revenue changes if Demand is elastic and price falls; a. Total revenue falls b. Total revenue rises c. Total revenue remains constant d. None of the above. '

7. In the following pair of goods, which has the higher price elasticity of demand: (a) Airline travel in the short run or airline travel in the long run; a. Airline travel in the short run b. Airline travel in the long run

8. How might you determine whether toothpaste and mouthwash manufacturers are competitors? a. If the cross elasticity coefficient is less than 0 b. If the cross elasticity coefficient is greater than 0 c. If the cross elasticity coefficient is equal to 0 d. None of the above

9. A tax is placed on the sellers of a good. What happens to the percentage of this tax that buyers pay as the price elasticity of demand for the good decreases? Be able to explain your answer. a. The buyer pays more of the tax b. The buyer pays less of the tax c. The buyer and seller splits the tax equally. d. None of the above

10. A college raises its annual tuition from $23,000 to $24,000, and its student enrollment falls from 4,877 to 4,705. Compute the price elasticity of demand. (Would demand be elastic or inelastic?) a. 1.25 b. .84 c. .56 d. 2.34

Answer 1

5.If Demand is inelastic and price falls; then Total revenue falls

option a

6. If Demand is elastic and price falls; Total revenue rises

Option b

7.  the higher price elasticity of demand is for Airline travel in the long run

Option b.

8. we need to see the cross elasticity of demand for toothpaste with respect to the price of mouthwash. If it is< 0, there is an inverse relationship between the quantity demanded of toothpaste and the price of mouthwash. This means the goods are complements. If it is> 0, there is a direct relationship between the quantity demanded of toothpaste and the price of mouthwash. The two goods are substitutes and thus are in competition with each other.

Option b. If the cross elasticity coefficient is greater than 0

Note: max. 4 parts at a time