I Multiple choices questions 1. When the price of a product is increased 10 perc

Question

I Multiple choices questions 1. When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. In this range of prices, demand for this product is a. elastic. b. inelastic. c. cross-elastic. d. unitary elastic. 2. Total revenue falls as the price of a good is raised, if the demand for the good is () a. elastic. b. inelastic. c. unitary elastic. d. perfectly elastic. 3. The price elasticity of demand increases with the length of the period considered simply because ( ) a. consumers' incomes will increase over time. b. the demand curve will shift outward as time passes. c. all prices will increase over time. d. consumers will be better able to find substitutes. 4. A state government wants to increase the taxes on cigarettes to increase tax revenue. This tax would only be effective in raising new tax revenues if the price elasticity of demand is a. unity b.elastic. c. inelastic. d. perfectly elastic. 5.Airlines charge business travelers more than leisure travelers because there is a moreC) a. elastic supply of business travel. b. inelastic supply of business travel. c. elastic demand for business travel. d. inelastic demand for business travel. 6. Cash expenditures a firm makes to pay for resources are called ) a. implicit costs. b. explicit costs. c normal profit. d. opportunity costs. 7. Economic profits are equal to () a total revenues minus fixed costs. b. total revenues minus the costs of raw materials.

Explanation / Answer

1. Change in quantity demanded is more change in price. Therefore, demand for the product is elastic.

OPTION A
2. OPTION A

3. OPTION D
4. OPTION C

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