Question

6. When the price of commodity B rises by 10%, the revenue received by firms that sell B rises by 5%. This is an example of

Answer 1

Answer:

Practice Problems -- Answer Key

Multiple choice questions.

1.The price elasticity of demand is:

a) the ratio of the percentage change in quantity demanded to the percentage change in price.

b) the responsiveness of revenue to a change in quantity.

c) the ratio of the change in quantity demanded divided by the change in price.

d) the response of revenue to a change in price.

2.If demand is price elastic, then:

a) a rise in price will raise total revenue.

b) a fall in price will raise total revenue.

c) a fall in price will lower the quantity demanded.

d) a rise in price won't have any effect on total revenues.

3. Complementary goods have:

a) the same elasticities of demand.

b) very low price elasticities of demand.

c) negative cross price elasticities of demand with respect to each other.

d) positive income elasticities of demand.