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Exam2Solution - Exam 2 Solution 1 A horizontal demand curve...

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Exam 2 Solution 1. A horizontal demand curve would be referred to as being: a. perfectly inelastic. b. relatively inelastic. c. relatively elastic. *d. perfectly elastic. 2. Compliments have: 3. Assume that E D for a good equals -.75. If price is increased by 4%, quantity will: 4. If the quantity demanded of a product rose from 900 to 1100 when the price of the product fell from $11 to $9, the price elasticity of demand is equal to: 5. If the demand curve is perfectly inelastic: a. price is determined solely by supply *b. quantity demanded is independent of price c. demand is unitarily elastic d. price is determined solely by demand 6. If the demand for a good is unitarily elastic, an increase in the price of the good will cause: 7. If the quantity demanded of a product falls from 600 to 500 when the consumer income rises from $10,000 to $11,000, the good has an income elasticity equal to: 8. For a normal good, the sign of its income elasticity: *a. will always be positive. b. will always be negative. c. will be positive if demand is elastic. d. will be negative if demand is inelastic.
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9. Assume that the price elasticity of a good is relatively elastic. Which of the following will be true for the good? 10. Assume that at a $20 price, 900,000 units of a good are sold. The good has a price elasticity of -1.2. If the price were raised to $22, what would be the new quantity of units sold? *a. 792,000 b. 810,000 c. 990,000 d. 1,008,000
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