CHAPTER 20 - CHAPTER 20 1 The income and substitution...

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CHAPTER 20 1. The income and substitution effects explain why: A) the elasticity of demand can be unity. B) product demand curves are downsloping. C) product supply curves are upsloping. D) equilibrium is always achieved in a competitive market. 2. The price elasticity of demand coefficient indicates: A) buyer responsiveness to price changes. B) the extent to which a demand curve shifts as incomes change. C) the slope of the demand curve. D) how far business executives can stretch their fixed costs. 3. The demand for a product is inelastic with respect to price if: A) consumers are largely unresponsive to a per unit price change. B) the elasticity coefficient is greater than 1. C) a drop in price is accompanied by a decrease in the quantity demanded. D) a drop in price is accompanied by an increase in the quantity demanded. 4. Suppose that as the price of Y falls from $2.00 to $1.90 the quantity of Y demanded increases from 110 to 118. Then the price elasticity of demand is: A) 4.00. B) 2.09.
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This note was uploaded on 10/15/2009 for the course ECON 2302 taught by Professor Parker during the Spring '09 term at University of Texas-Tyler.

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CHAPTER 20 - CHAPTER 20 1 The income and substitution...

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