Quiz 2 - a. 10 b. 5 c. 2 d. 1 e. 0.5 3. When the demand...

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1. The price elasticity of demand is: a. the responsiveness of price to changes in the quantity demanded of the product; b. the responsiveness of quantity to changes in the price demanded of the product; c. the change in the firm’s total revenue when prices change; d. exactly the same as the slope of the demand curve; e. none of the above 2. If an increase in the price of the oil by 10% would cause the quantity demanded for oil to fall by 5%, the elasticity of demand for oil in absolute terms is:
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Unformatted text preview: a. 10 b. 5 c. 2 d. 1 e. 0.5 3. When the demand curve for a good is perfectly inelastic, raising the price of the good by 25% will raise the revenue of the firm by: a. 25% b. 50% c. 75% d. 100% e. 125% 4. If the cross-elasticity of demand of the two goods is negative, we can conclude that the two goods are: a. substitutes; b. complements; c. normal goods; d. inferior goods; e. luxury goods Answers: 1. b 2. e 3. a 4. b...
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Quiz 2 - a. 10 b. 5 c. 2 d. 1 e. 0.5 3. When the demand...

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