Quiz: Module 3 Problem Set
Assume that the own-price elasticity of demand is -2 for a certain firm’s product. If the firm raises price, the firm’s managers can expect total revenue to:
decrease
increase
remain the same
either increase or decrease, depending on the size of the changeSuppose the monthly demand for soda by a consumer is given by Q=10-8P
At a price of $1 and quantity of 2, what is the own-price elasticity of demand for soda?
-1
-2
-4
-8If milk has an own-price elasticity of -0.75, this means:
A 1% increase in price of milk leads to a 75% decrease in quantity demanded.
A 1% increase in price of milk leads to a 0.75% decrease in quantity demanded.
A 1% increase in price of milk leads to a 75% increase in quantity demanded.
A 1% increase in price of milk leads to a 0.75% increase in quantity demandedIf a price increase from $8 to $10 causes quantity demanded to fall from 500 to 400, what is the own-price elasticity of the good at a price of $8?
-0.80
-0.20
-1.00
-50.00What does the income elasticity of demand represent?
For a 1% change in price of a good, what percent change can we expect in demand
For a 1% change in income, what percent change can we expect in demand
For a 1% change in demand, what percent change can we expect in price of a good
For a 1% change in demand, what percent change can we expect in income
Quiz: Module 3 Problem Set
If a good has an own-price elasticity of demand equal to -1.2, the good is:
unit elastic
inelastic
elastic
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