A firm sells a good that is perceived by consumers as a necessity. It also has few substitutes. This good is likely to have demand that is _______ and the price elasticity of demand (in absolute value) would be _______. a. elastic, less than one b. inelastic, greater than one c. inelastic, less than one d. elastic, greater than one

Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter5: Price Elasticity Of Demand And Supply
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A firm sells a good that is perceived by consumers as a necessity. It also has few substitutes. This good is likely to have demand that is _______ and the price elasticity of demand (in absolute value) would be _______.
a. elastic, less than one
b. inelastic, greater than one
c. inelastic, less than one
d. elastic, greater than one

 

Assume there is a decrease in the price of a complement and a decrease in the price of a substitute in production. Which of the following statements is correct?
a. The equilibrium price will definitely decrease.
b. The equilibrium quantity will definitely increase.
c. The equilibrium quantity will definitely decrease.
d. The equilibrium price will definitely increase.

 

When both demand and supply change simultaneously, there will be some uncertainty in the results.
a. True
b. False

 

The sellers of a good have requested the government to stop the price from going below a certain amount. If the government grants the request, the price restriction will be a price ceiling.
a. True
b. False

 

Assume that a store has a 20% off sale that causes an increase in quantity demanded of 25%. The price elasticity of demand is _______ (in absolute value) and the demand for the good is _______.
a. 1.25, inelastic
b. 1.25, elastic
c. 0.80, elastic
d. 0.80, inelastic

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