uiz: Module 3 Problem Set Quiz: Module 3 Problem Set Quiz: Module 3 Problem Set Quiz: Module 3 Problem Set Quiz: Module 3 Problem Set

Assume that the own-price elasticity of demand is -2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to:

decrease

increase

remain the same

either increase or decrease, depending on the size of the change

Suppose the monthly demand for soda by a consumer is given byQ=10-8P

At a price of $1 and quantity of 2, what is the own-price elasticity of demand for soda?

-1

-2

-4

-8

If milk has an own-price elasticity of -0.75, this means:

A 1% increase in price of milk leads to a 75% decrease in quantity demanded.

A 1% increase in price of milk leads to a 0.75% decrease in quantity demanded.

A 1% increase in price of milk leads to a 75% increase in quantity demanded.

A 1% increase in price of milk leads to a 0.75% increase in quantity demanded

If a price increase from $8 to $10 causes quantity demanded to fall from 500 to 400, what is the own-price elasticity of the good at a price of $8?

-0.80

-0.20

-1.00

-50.00

What does the income elasticity of demand represent?

For a 1% change in price of a good, what percent change can we expect in demand

For a 1% change in income, what percent change can we expect in demand

For a 1% change in demand, what percent change can we expect in price of a good

For a 1% change in demand, what percent change can we expect in income

Quiz: Module 3 Problem Set

If a good has an own-price elasticity of demand equal to -1.2, the good is:

unit elastic

inelastic

elastic