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
A firm sells a good that is perceived by consumers as a necessity. It also has few substitutes. This good is likely to have
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
b. The
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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