Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 12, Problem 6MC
To determine
Acquiring substitute good.
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The rate of changes in demand due to the changes in the determinants of demand is known as __________.
a.
Elasticity of demand
b.
Law of demand
c.
Quantity demanded
d.
Effective demand
Indicate whether you would expect the price elasticity of demand for each of the following to be relatively elastic or inelastic.
If the price of home computers rises and people still buy more of them, then
a. the law of demand does not hold.
b. this could have been caused by a change in the none price determinants of demand.
c. demand has decreased.
d. the demand for home computers is elastic.
e. the demand for home computers is inelastic.
Chapter 12 Solutions
Managerial Economics: A Problem Solving Approach
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- The price of coffee rose sharply last month, while the quantity sold remained the same. Five people suggest various explanations: Leonard: Demand increased, but supply was perfectly inelastic. Sheldon: Demand increased, but it was perfectly inelastic. Penny: Demand increased, but supply decreased at the same time. Howard: Supply decreased, but demand was unit elastic. Raj: Supply decreased, but demand was perfectly inelastic. Who could possibly be right? Use graphs to explain your answer.arrow_forwardSuppose we observe that when the market price of a good rises dramatically (e.g., the price of houses during the pandemic) the quantity traded increases only slightly, This would be because Answers A - D A.supply has increased and demand is very elastic. B.supply has decreased and demand is very elastic. C.supply has increased and demand is very inelastic. D. demand has increased and supply is very inelastic.arrow_forwardThe equilibrium price will be determined entirely by the demand when a.demand is perfectly inelastic. b.demand is downward sloping. c.supply is perfectly elastic. d.supply is perfectly inelastic.arrow_forward
- This means that when the price of a certain commodity increases, automatically demand will fall and vice versa, all other things held constant. Select one: a. Law of demand b. demand c. quantity demanded d. elasticity of demandarrow_forwardDemand for the desired quantity of a good that is backed by the ability to buy that good is known as: A. Effective Demand B. Derived Demandarrow_forwardAn increase in demand will have a ____ effect on price and a ____ effect on output when supply is relatively elastic.a. larger; smallerb. larger; largerc. smaller; largerd. smaller; smallerarrow_forward
- An increase in the supply of grain will reduce thetotal revenue grain producers receive ifa. the supply curve is inelastic.b. the supply curve is elastic.c. the demand curve is inelastic.d. the demand curve is elastic.arrow_forwardiii. A demand curve which is parallel to the vertical axis is: A. perfectly inelastic. B. perfectly elastic. C. relatively inelastic. D. relatively elastic.arrow_forward1. An example of a market where supply and demand are both inelastic. 2. An example of a market where both supply and demand are both elastic. 3. An example of a market where supply is inelastic and demand is elastic. 4. An example of a market where supply is elastic and deman is inelastic.arrow_forward
- The demand of Pepsi increases as the price of Cola increases and vice versa. Determine, what type of demand is there between Pepsi and Cola? a. Cross demand b. Composite demand c. Derived demand d. Income demandarrow_forward. ______________ is the willingness to buy a product and the ability to pay for it. Select one: a.Demand b.Quantity c.The Law of Demand d.Elasticityarrow_forwardWhat is the concept of perfectly inelastic demand in economics? A. A situation where quantity demanded remains unchanged regardless of price changes B. A situation where price elasticity of demand is equal to zero C. A situation where price and quantity demanded move in opposite directions D. A situation where consumers are indifferent to changes in pricearrow_forward
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