Question

1. At a price of​ $5, quantity demanded is​ 70; and at a price of​ $7, quantity demanded is 50. Since total revenue​ ________ by the price​ increase, demand must be​ ________.

A.is​ unchanged; unit elastic

B.is​ increased; elastic

C.is​ decreased; inelastic

D.is​ unchanged; elastic

2. Demand determines​ ________ entirely when​ ________ is perfectly inelastic.

A.quantity; supply

B.​price; supply

C.price and​ quantity; supply

D.price and​ quantity; demand

Answer 1

1. At a price of​ $5, quantity demanded is​ 70; and at a price of​ $7, quantity demanded is 50. Since total revenue​ is unchanged by the price​ increase, demand must be​ unit elastic. (percent change in quantity demanded = percent change in price level)

2. Demand determines​ price entirely when​ supply is perfectly inelastic.