1) When a 20% change in price causes a change in quantity demanded less than 20%, demand for the product is..
A) elastic
B) inelastic
C) perfectly elastic
D) unitary elastic
2) The own-price elasticity of demand for apples is -1.2. If the price of apples increases by 8%, what will happen to the quantity of apples demanded?
A) It will increase by 5%
B) it will fall by 12%
C) it will fall by 9.6%
D) it will fall by 8%
3) When a firm decreases the price of its own product and finds its total revenue to increase, then
A) the demand for this product is price elastic
B) the demand for this product is price inelastic
C) the cross-price elasticity is negative
D) the income elasticity is less than 1
4) When a related products price decreases, a firm finds fewer customers purchase its own product than
A) the two products are complements, and the cross-price elasticity is negative
B) the two products are substitutes, and the cross-price elasticity is positive
C) the two products are complements, and the cross-price elasticity is positive
D) the two products are substitutes, and the cross-price elasticity is negative
5) Suppose you used a statistical technique and estimated a demand for Starbucks coffee. The demand function is given by Qd=100-0.5*P-4*Pm+0.001* Income, where Qd is the quantity of coffee sold per day, and P is the price of Starbucks coffee, and Pm is the price of McDonald's coffee. Regarding this equation, which of the coefficient has the wrong sign according to your knowledge?
A) the coefficient of P has the wrong sign
B) the coefficient of Pm has the wrong sign
C) the coefficient of income has the wrong sign
D) all coefficients make economic sense