Question

3a)A good has a price elasticity of demand of 2.0. You would correctly interpret this to mean which of the following?

A 10 percent increase in price would lead to a 20 percent increase in quantity demanded.

A 10 percent increase in price would lead to a 5 percent decrease in quantity demanded.

A 10 percent increase in price would lead to a 5 percent increase in quantity demanded.

A 10 percent increase in price would lead to a 20 percent decrease in quantity demanded.

b)

The availability of substitutes __________ price elasticity of demand and the availability of complements __________ price elasticity of demand.

increases; decreases

increases; increases

decreases; increases

decreases; decreases

c).The more sensitive quantity supplied is to price changes for a given increase in price, which of the following is true?

The steeper the supply curve will be

The more the curve will shift to the right

The less the curve will shift to the right

The flatter the supply curve will be

d)The capacity of the stadium for the local baseball team, the Uretown Yokels, is fixed. What does this mean about the price of tickets?

They are mainly determined by supply.

They are determined entirely by supply.

They are determined entirely by demand.

They are determined by a combination of demand and supply

E)Which of the following is not true about income elasticity of demand?

It is negative for an inferior good.

It is positive for a normal good.

The greater the positive value, the greater the change in demand when income changes.The greater the positive value, the greater the change in demand when income changes.

It is equal for two goods that are substitutes.

Answer 1