Question

____ 40. The price elasticity of a vertical demand curve is always

a. infinitely large.

b. zero.

c. one.

d. increasing as price increases.

____ 41. Along a perfectly elastic demand curve,

a. the slope is always zero.

b. the price elasticity of demand is 1.

c. consumer purchases will not respond at all to a change in price.

d. All of the above are true.

____ 42. A price cut will increase the revenue a firm receives if the demand for its product is

a. elastic.

b. inelastic.

c. of unit elasticity.

d. straight elastic.

____ 43. In an attempt to raise sales, Hannah cut prices in her bookstore by 20 percent. If the dollar value of her sales remained constant, that indicates

a. old customers bought no more books.

b. no new customers bought books.

c. the quantity of books sold increased 20 percent.

d. the demand curve is vertical.

____ 44. A demand curve to remain unit elastic along its entire length should

a. cross the X axis.

b. touch the X axis but not the Y axis.

c. never touch either the X or the Y axis.

d. touch the Y axis but not the X axis.

Answer 1

Ans:

40) Option B

Zero

The price elasticity of a vertical demand curve is always zero

41) Option A

the slope is always zero

The perfectly elastic demand curve is a horizontal curve and the the slope is always zero?.

42) Option A

elastic.

when the demand is elastic change in demand is greater than the change in price.Hence a decrease in price will increase the revenue.

43) Option C

the quantity of books sold increased 20 percent.

when the demand is elastic, change in demand is greater than the change in price.Hence a decrease in price will increase the revenue.?In this case the price is decrease by 20 percent and quantity demanded is increased by 20 percent making sales constant.