1.If the elasticity of demand for paperback books is - 1.7 in the range between $6 and $8, what happens to total consumer expenditures on paperback books when the price rises from $6 to $8?

a. Total consumer expenditures will decrease.

b. We cannot determine what will happen to total consumer expenditures unless we also know something about the publishers' costs.

c. Total consumer expenditures will remain unchanged.

d. Total consumer expenditures will increase.

2.Generally, toothpaste is a small part of a consumer's income and is a necessity. Therefore, the demand for toothpaste

a. is perfectly elastic.

b. is inelastic.

c. is unit-elastic.

d. is elastic.

3.An electric utility announced an increase in rates for residential customers. The announcement contained a statement saying that customers could conserve their energy usage and likely would not see any increase in their total monthly electric bill. What is the implication of this statement?

a. That the demand for electricity is perfectly elastic.

b. That the demand for electricity is inelastic within the range of the rate increase.

c. That the demand for electricity is unit-elastic within the range of the rate increase.

d. That the demand for electricity is elastic within the range of the rate increase.

4.Lucy gets a bad haircut and afterwards is heard to say, "This haircut was a waste of money." Which of the following is an accurate restatement of Lucy's comment?

a. "The hair stylist should be fired."

b. "I derived no marginal utility from the haircut."

c. "There is no opportunity cost associated with the money I spent on the haircut."

d. "The marginal utility I derived from the haircut is less than I thought it would be."