Problem 1: The demand for agricultural output is price inelastic. This means that if farmers, taken collectively, have a bumper crop, they will experience,
a. Lower price, greater quantities sold, and lower incomes
b. Higher prices, greater quantities sold, and higher incomes
c. Lower prices, lower quantities sold, and lower incomes
d. Higher prices, higher quantities sold, and higher incomes.
Problem 2: Along the upper end of a linear demand curve, the price elasticity of demand will be
a. price inelastic
b. price elastic
c. unit-price elastic
d. positive
Problem 3: Which of the following is not a factor in determining the price elasticity of demand?
a. the number of available substitutes
b. the tie period involved
c. the proportion of the budget spent on the item
d. the slope of the supply curve.