Elasticity-Part Two

If an increase in the price of a good has no impact on the total revenue in that market, demand must be

• price inelastic

• price elastic

• unit price elastic

• perfectly price elastic

If the demand for a good is price elastic, an increase in its price will increase total revenue in that market.

• True

• False

Based on the demand curve for good X, it can be determined that good x has:

• Many substitutes
• A few substitutes
• No substitutes
• Only one substitute

A product is likely to have a price elasticity of demand that exceeds 1 when:

• Its price falls

• It is a necessity

• It has close substitutes

• Consumers are not very responsive to changes in price

Demand is unit elastic if it is less than 1.0

• True
• False

Suppose that elasticity of demand of socks is 0.7.  If the price of socks is reduced by 10%, how will sales be effected?

• sales will grow by more than 10%
• Sales will grow by 10%
• Sales will grow by less than 10%
• Sales will decrease by 10%

The elasticity of demand for tissues is 0.66. This means the demand for tissues is

• elastic
• unit elastic
• inelastic
• really expensive

If the price elasticity of demand for apples is 3, then what will be the impact on total revenue if price decreases?

• Total revenue will increase

• Total revenue will not change

• Total revenue triples

• Total revenue will fall to zero

• Total revenue will decrease

The city of Xela raised the fees that it charged for dumping waste at the city dump, but the revenue the city earned from dump fees didn’t change.

What is the price elasticity of demand for dump fees?

• Elastic

• Unit Elastic

• Perfectly Elastic

• Perfectly Inelastic

• Inelastic

Susan's Shellfish Shack increased the price of their shrimp sandwiches by 10%, and her total revenue increased 20%, percent.

Based on this information, what can we conclude about shrimp sandwiches?

• Consumers consider shrimp sandwiches luxuries.

• Consumers consider shrimp sandwiches necessities.

• Consumers have an infinite elasticity of demand for shrimp sandwiches.

• Consumers have a unit elastic demand for shrimp sandwiches.

• Consumers think shrimp sandwiches and crab sandwiches are substitutes.