Question

Practice 13. Demand for which sort of items are most likely almost perfectly elastic?

luxury goods

items that take a large share of individuals’ income

goods with many substitutes

all of the above

Practice 64.

When demand is elastic, total revenue ___________ when price _____________ .

Lucky You! Helpful Hint: Pick 2

Select all that apply:

• increases, decreases

• decreases, decreases

• decreases, increases

• increases, increases

Practice 88.

Which formula best represents the concept of cross-price elasticity of demand?

Cross-price elasticity of demand=% change in quantity demanded of good A% change in quantity demanded of good B

Cross-price elasticity of demand=% change in quantity demanded of good A% change in price of good B

Cross-price elasticity of demand=% change in price of good A% change in quantity demanded of good B

Cross-price elasticity of demand=% change in price of good B% change in quantity demanded of good A

Answer 1

1) Goods with many close substitutes

option(C)

2) When demand is elastic, total revenue decreases when price increases and total revenue increases when price decreases

option(A) and (C)

3) Cross-price elasticity of demand=% change in quantity demanded of good A% /change in price of good B

option(B)