quiz 3

Blossom, Inc. sells 500 bottles of perfume a month when the price is $7. A huge increase in resource costs forces Blossom to raise price to $9, and the firm only manages to sell 460 bottles of perfume. The price elasticity of demand is:

0.33 and inelastic

when the price of a product is increased by 10 percent, the quantity demanded decreases 15 percent. the price-elasticity of demand coefficient for this product is:

1.5

if the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will increase quantity demanded by:

5 percent

demand is said to be inelastic when:

A reduction in price results in a decrease in total revenue

Suppose we find that the price elasticity of demand for a product is 3.5 when its price is increased by 2 percent. We can conclude that quantity demanded:

decreased by 7 percent

If 100 shirts are sold when unit price is $10, while 75 shirts are sold when the unit price is $15, one can conclude that in this price range:

demand for the shirts is inelastic

total revenue falls as the price of a good is raised, if the demand for the good is:

elastic

a union argues that a price cut will boost the revenues of the firm, while management argues that the opposite is true. this suggests that the price elasticity of demand is:

elastic from the union's perspective; inelastic from management's perspective

Most demand curves are relatively elastic in the upper-left portion because the original price:

from which the percentage price change is calculated is large and the original quantity from which the percentage change in quantity is calculated is small

if the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will

increase the amount demanded by more than 10 percent

You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1. To increase total revenues from that product, you should:

increase the price of the software

in which of the following cases will total revenue increase?

price rises and demand is inelastic

the larger the coefficient of price elasticity of demand for a product, the:

smaller the resulting price change for an increase in supply

which of the following is not characteristic of the demand for a commodity that is elastic?

the elasticity coefficient is less than one

the price of elasticity of demand is always negative because of:

the law of demand