question
The cross-price elasticity of demand between milk and soft drinks is likely to be:
answer
positive, because the goods are substitutes.
question
The price elasticity of demand helps determine the effect of price changes on a firm's
answer
revenue
question
According to the law of _____, the marginal utility received from each additional unit of a good consumed declines, other things constant.
answer
diminishing marginal utility
question
Which of the following tends to make demand for a good more elastic?
answer
Consumers have a long time to adjust to a price change
question
The price elasticity of demand helps determine the effect of price changes on a firm's:
answer
revenue
question
If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the demand is:
answer
inelastic
question
Price elasticity of demand is useful because it measures _________ responsiveness to changes in _____________.
answer
consumers'; price
question
Elasticity measures:
answer
the responsiveness of decision makers to changes in price, income, or other variables.
question
If marginal utility is positive, then total utility is:
answer
increasing
question
Table 5.6 shows the change in the quantity demanded for Good A and Good B as a result of a change in income. Use the information in the table below to calculate the value of the income elasticity of demand for Good B. *****(Two decimal places)
answer
-0.64
question
When total utility is falling, marginal utility is
answer
negative
question
A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda. This means that
answer
root beer and orange soda are substitutes
question
Which of the following statements is true of utility?
answer
Utility is a subjective measure of satisfaction an individual receives from consuming a good or service.
question
Table 5.2 shows the change in the quantity demanded for Good A and Good B as a result of the change in their price. Use the information in the table below to calculate the price elasticity of demand for Good A. *****(Two decimal places)
answer
-1.64
question
If a 5 percent increase in price leads to an 8 percent decrease in quantity demanded, demand is:
answer
elastic
question
"More elastic" means
answer
more responsive
question
If Joe says that nothing comes close to a Pepsi, his demand for Pepsi is likely to be:
answer
relatively price inelastic.
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