1. An increase in each of the following factors would normally provide a subsequent increase in demand, except:
a. price of substitute goods
b. level of competitor advertising
c. consumer income level
d. consumer desires for goods and services
e. a and b
2. A price elasticity (ED) of -1.50 indicates that for a ____________ increase in price, quantity demanded will ____________ by ______________.
a. one percent; increase; 1.50 units
b. one unit; increase; 1.50 units
c. one percent; decrease; 1.50 percent
d. one unit; decrease; 1.50 percent
e. ten percent; increase; fifteen percent
3. Which of the following statements concerning the price elasticity of demand is (are) true?
a. The greater the number of substitute goods, the more prices elastic the demand for the product.
b. The demand for durable goods tends to be more price elastic than the demand for nondurables.
c. The demand for relatively low-priced goods tends to be more price elastic than the demand for expensive items.
d. a and b only
e. a, b, and c
4. Assume the price of product B, increases from $1 to $1.50. As a result, the quantity demanded of product "A increases from 500 to 600 a month. This indicates that the cross-price elasticity and relationship between the two products.
a. 0.50, Substitutes
b. 0.45, Substitutes
c. 0.45, Complements
d. .50, Complements
e. Products are not related
5. Given the marginal revenue from a product is $15 and the price elasticity of demand is -1.2, what is the price of the product?
a. Not enough Information
b. $8
c. $88
d. $42
e. $68
6. Given the demand function: QD = -10-2.1 P +.62 Y. Where P is price and Y is Income
a. For a 1% increase in price, quantity demanded falls by 2.1%
b. For a 1% increase in price, quantity demanded increases by .62%.
c. For a 1% decrease in price, quantity demanded increases by 2.72%
d. None of the above