Question

3.Factors that affect a product’s price elasticity of demand are

A. availability of close substitutes.

B. passage of time.

C. necessity versus luxury.

D. definition of the market.

E. All of the above are correct.

4. If a price increase causes a decrease in total revenues (total expenditures), then the product is considered to be

A. price elastic.

B. price inelastic.

C. unitary elastic.

D. All of the above are correct.

E.None of the above are correct.

5.Price elasticity of demand is equal to the slope of the demand curve.

A.True

B. False

6.For most consumers, a snack food such as potato chips has a price elasticity of demand that is

A. unitary elastic.

B. perfectly inelastic.

C. extremely elastic, almost perfectly elastic.

D.All of the above are correct.

E. None of the above are correct.

7.When the price of a taco falls by 10%, the quantity of pizza demanded decreases by 5%. The cross elasticity of demand for pizza with respect to the price of a taco is

A. 2.0

B. -2.0

C 0.50

D. -0.50

E. cannot be determined with the given information.

8. When the price of a taco falls by 10%, the quantity of pizza demanded decreases by 5%. The cross elasticity of demand for pizza with respect to the price of a taco demonstrates that tacos and pizza are

A.substitute goods.

B. complementary goods.

C. factors of production.

D. intermediate goods.

E. cannot be determined with the given information.

9.In the long run, demand is likely to become more elastic because consumers are able to make changes with fewer constraints.

A. True

B. False

10. If the cross elasticity of bananas and apples is positive, this indicates that bananas and apples are

A. complementary goods.

B. substitute goods.

C. unrelated goods.

D. public goods.

E. low demand goods.

Answer 1