Question 36

If 50 units of Good X are sold at a price of $1 each and 25 units are sold at a price of $2 each, one can conclude that the demand for Good X is:

Question 36 options:

a)

elastic

b)

inelastic

c)	unit elastic

d)	characterized by negative cross elasticity.

e)	characterized by positive income elasticity.

Question 37

If a 2 percent rise in price leads to a 4 percent decrease in quantity demanded, then demand is:

Question 37 options:

a)	elastic and total revenue decreases.

b)	elastic and total revenue increases.

c)	inelastic and total revenue decreases.

d)	inelastic and total revenue increases.

e)	elastic, but we cannot tell what happens to total revenue without more information.

Question 38

The demand for a product will be relatively more inelastic:

Question 38 options:

a)	when the good has many substitutes.

b)	when the good is a necessity.

c)	when the product is very expensive.

d)	in the short run.

e)	all of the above.

Question 39

If the price elasticity of demand equals 3.5 and price rises, total revenue will:

Question 39 options:

a)

rise.

b)

fall.

c)	stay the same.

d)	equal zero.

Question 40

The Cozy Chair Company believes it can sell 20 chairs at $200 per chair, or 30 chairs at $150 per chair. Using the midpoint formula, what do they think is the price elasticity of demand?

Question 40 options:

a)

2.5

b)

1.4

c)

0.7

d)

0.5