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confused
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1. Suppose we observe that as a firm increases its price its total revenue decreases. What do we know?
a. Demand is price inelastic.
b. Demand is price elastic.
c. Demand is unitary elastic.
d. Demand is perfectly price inelastic.
2. On a linear demand curve, demand is ________ at large quantities than it is at the middle of the demand curve.
a. more elastic
b. less elastic
c. equally elastic
d. impossible to tell
3. The quantity sold of a product is 100 at the unit price $5. Suppose the price elasticity of demand for the product by the initial value method is 1.5, and you would like to increase the quantity sold to 120. Then the new price must be:
a. $3.33.
b. $3.66.
c. $4.33.
d. $4.66.
4. Suppose that in a month the price of a slice of pizza increases from $2 to $2.20. At the same time, the quantity of slices of pizza demanded decreases from 100 to 90. The price elasticity of demand for slices of pizza (calculated using the midpoint formula) is:
a. zero.
b. inelastic.
c. unitary elastic.
d. elastic.
5. Suppose that OPEC currently sets oil price at $1.50 per gallon, and the current consumption is 100 million gallons per day. The price elasticity of demand for oil is estimated to be 0.7 by the initial value method. If OPEC raises the oil price to $1.80 per gallon,
a. quantity demanded decreases by 10 million gallons while total sales revenue increases by $4.4 million per day.
b. quantity demanded decreases by 14 million gallons while total sales revenue increases by $4.8 million per day.
c. quantity demanded decreases by 10 million gallons and total sales revenue decreases by $4.4 million per day.
d. quantity demanded decreases by 14 million gallons and total sales revenue decreases by $4.8 million per day.
a. Demand is price inelastic.
b. Demand is price elastic.
c. Demand is unitary elastic.
d. Demand is perfectly price inelastic.
2. On a linear demand curve, demand is ________ at large quantities than it is at the middle of the demand curve.
a. more elastic
b. less elastic
c. equally elastic
d. impossible to tell
3. The quantity sold of a product is 100 at the unit price $5. Suppose the price elasticity of demand for the product by the initial value method is 1.5, and you would like to increase the quantity sold to 120. Then the new price must be:
a. $3.33.
b. $3.66.
c. $4.33.
d. $4.66.
4. Suppose that in a month the price of a slice of pizza increases from $2 to $2.20. At the same time, the quantity of slices of pizza demanded decreases from 100 to 90. The price elasticity of demand for slices of pizza (calculated using the midpoint formula) is:
a. zero.
b. inelastic.
c. unitary elastic.
d. elastic.
5. Suppose that OPEC currently sets oil price at $1.50 per gallon, and the current consumption is 100 million gallons per day. The price elasticity of demand for oil is estimated to be 0.7 by the initial value method. If OPEC raises the oil price to $1.80 per gallon,
a. quantity demanded decreases by 10 million gallons while total sales revenue increases by $4.4 million per day.
b. quantity demanded decreases by 14 million gallons while total sales revenue increases by $4.8 million per day.
c. quantity demanded decreases by 10 million gallons and total sales revenue decreases by $4.4 million per day.
d. quantity demanded decreases by 14 million gallons and total sales revenue decreases by $4.8 million per day.