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

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
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:
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

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...
View Full Document

This note was uploaded on 07/01/2011 for the course ECO 304K taught by Professor Hickenbottom during the Fall '10 term at University of Texas.

Page1 / 2

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

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online