Ch.4 True/False practice Econ
Buyers are more responsive to price changes for goods on which they spend a larger percentage of their income.
True
Popcorn and butter would be classified as complementary goods.
True
As income rises, demand for inferior goods rises.
False
Demand schedules and d mane curves contain the same information presented in different ways.
True
Future price has no relationship to current demand.
False
If a decrease in income causes an individual's demand curve for a good to shift to the left, then the good is inferior.
False
If a good has many substitutes, it can be considered inelastic.
False
If a seller increases the price of a good, it will always bring about an increase in total revenue.
False
If consumers expect the price of a product to increase in the future, then demand for the product will decrease.
False
If movie prices increase by 30 percent and attendance drops by 40 percent, demand is considered inelastic.
False
If salt prices increase 50 percent and the quantity demanded drops 25 percent, we know that salt is an elastic good.
False
If the demand for chocolate increases, the demand curve shifts to the left.
False
If the percentage change in price is 10 percent and the percentage change in quantity demanded is 5 percent, then elasticity of demand is equal to 2.
False
If the price elasticity of demand for a firm's output is inelastic, then the firm could increase its revenue by reducing price.
False
In the elasticity equation, the numerator is the percentage change in price.
False
Inelastic demand is usually associated with demand for luxuries.
False
Price change is shown on a graph by a shift of the curve to the left.
False
The law of demand states that as prices rise, the quantity demanded rises also.
False
The law of diminishing marginal utility states that as a person consumes additional units of a good, eventually the utility gained from each additional unit of the good increases.
False
When the demand for one good moves in the same direction as the price of another good, the two are complements.
False
A movement along the demand curve to a different point illustrates price change on a graph.
True
Business owners need to understand economic concepts like elasticity.
True
Buyers are less responsive to price changes for goods on which they spend a smaller percentage of their income.
True
Elasticity is really measuring consumer response to a price change.
True
If a firm increases the price of its product and total revenue increases, then the price elasticity of demand must be less than one.
True
If a price change results in a substantial change in quantity demanded, that demand is considered elastic.
True
If demand is Inelastic and price decreases, total revenue will decrease.
True
If you sell a product for which the demand is inelastic and you reduce the price, your total revenue will decrease.
True
In the elasticity equation, the numerator is percentage change in quantity demanded.
True
One of the most important factors in determining whether or not the demand for a product is elastic is whether or not substitutes for it exist.
True
Price is the only factor that can cause a change in quantity demanded.
True
The law of diminishing marginal utility states the consumers value the first unit of a good more highly than an additional unit of the same item.
True
The less time you have to respond to a price change in good, the more likely it is that you demand for the good is going to be inelastic.
True
The steeper the demand curve, the less elastic the demand curve.
True
The substitution effect holds that an increase in the price of a product or service will cause an individual to search for substitutes.
True
There is an universe relationship between the quantity demanded of a product and its price.
True
Time is one of the factors that determine elasticity of demand.
True
When calculating elasticity of demand, if demand is less than 1 it is considered Inelastic.
True
Whenever demand for a good changes, the demand curve for that goods shifts to the right or to the left.
True
A change in the price of a product will cause the demand curve for that product to shift.
False
A shift in demand is referred to as a change in quantity demanded.
False
A shift of the curve and a movement along the curve are the same.
False
An individual's demand curve is constructed under the assumption that price is held constant and all other determinants of demand are allowed to vary.
False
Because of the relationship between elasticity and total revenue, most sellers would prefer to sell elastic goods.
False
Butter and bread are substitutes.
False
Buyers have demand for a good or service whenever they have enough money to purchase the item.
False
Demand and quantity demanded are basically the same.
False
Demand curves slope upward from left to right.
False
Economists refer to damaged goods as inferior goods.
False