Determine whether the following statements are true, false or uncertain. Give reasons for your answer.
i. The minimum wage is an example of a price ceiling.
ii. If demand decreases and supply increases, the equilibrium price will fall and the quantity will rise.
iii. If demand increases and supply increases, the equilibrium price will rise and the quantity will rise.
iv. Price ceilings generally help consumers by allowing them to purchase the amount they want at a low price.
v. Prices below the equilibrium level result in surplus, while prices above equilibrium result in a surplus.
vi. If demand is perfectly inelastic, then the own price elasticity of demand is infinite in absolute value.
vii. The elasticity of demand is constant along a linear demand curve.
viii. The demand for beverages is more elastic than the demand for orange juice.
ix. If a firm decreases the price of its product, its total revenue will fall.
x. When the price of gum was “low”, consumers in the US spent a total of $2 billion annually on gum consumption. When the price doubled, consumer expenditures actually increased to $3 billion annually. This indicates that the demand for gum is upward sloping.