EU04L1

  • 1

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    When the supply of a good decreases, the price of the good __________ and total revenue from the sale of the good _______________.

    falls; can either increase or decrease
    rises; always increases
    rises; always decreases
    rises; can either increase or decrease

  • 2

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    The price elasticity of demand is equal to the ____________ in the _____________ divided by the ________________ in the ______________.

    change; price; change; quantity demanded
    percentage change; quantity demanded; percentage change; price
    change; quantity demanded; change; price
    percentage change; price; percentage change; quantity demanded

  • 3

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    When the percentage change in quantity demanded is greater than the percentage change in price, the demand for the good is _______________.

    elastic
    unit elastic
    inelastic
    perfectly inelastic

  • 4

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    When the demand for a good is perfectly inelastic, ___________________.

    the price elasticity of demand is zero
    the price elasticity of demand is greater than 1
    total revenue is as large as possible
    the demand curve for the good is horizontal

  • 5

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    If the demand for a good is inelastic, the price elasticity of demand is ________.

    between 0 and 1
    1
    less than zero
    greater than 1

  • 6

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    If the demand for a good is perfectly elastic, the price elasticity of demand is ______________ and the demand curve is ___________________.

    infinite; horizontal
    zero; horizontal
    zero; vertical
    infinite; vertical

  • 7

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    When the demand for a good is elastic and its price increases, the total revenue from the sale of the good will _____________.

    decrease
    increase
    not change
    increase initially and then decrease

  • 8

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    Because toothpaste and toothbrushes are complements, the ____________ elasticity of demand is ______________.

    cross; negative
    income; negative
    income; positive
    cross; positive

  • 9

    •

    Haircuts and taxi rides are normal goods, so their ____________________.

    income elasticities of demand are positive
    income elasticities of demand are negative
    cross elasticity of demand is negative
    cross elasticity of demand is positive

  • 10

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    A luxury is a good or service with a demand that is _____________ and a necessity is a good or service with a demand that is _____________.

    income elastic; income inelastic
    cross elastic; cross inelastic
    cross inelastic; cross elastic
    income inelastic; income elastic

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