Supply and Demand and Price

3620 WordsMar 12, 201315 Pages
Chapter 04 Demand 10. The long-run price elasticity of demand for a product is generally _________ the short-run elasticity for the same product. A. lower than B. equal to C. higher than D. not comparable to 11. Assume the demand function for skin care products is given by Q = 1,000 – 20 P + 5I. If P=$25 and I=$1,000 currently, then: A. skin care products are a normal good. B. the elasticity of demand is equal to 11. C. skin care products are inferior. D. The price is too high 12. If the demand for product A displays high and positive cross-price elasticity with respect to the price of product B, then: A. the demand for product A is likely to have a low price elasticity. B. products A and B are substitutes. C.…show more content…
SeatComfy's sales decrease by 25 units for each dollar increase in price. D. SeatComfy's chairs are a normal good; SeatComfy's chairs and tables are complements, while SeatComfy's and competitors' chairs are substitutes. SeatComfy's sales decrease by 250 units for each dollar increase in price. 23. Assume the demand function for SeatComfy's table chairs is as given in the previous question (Q = 5,000 – 25P + 4I +10PA – 15PT). Moreover, assume that currently P = 10, PA = 15, I = 500, PT = 100. Which of the following is true? A. If SeatComfy increases its price by 1%, sales will increase as well as total revenues. B. If SeatComfy decreases its price by 1%, sales will increase, while total revenues will decrease. C. If SeatComfy increases its price by 1%, sales will decrease, while total revenues will increase. D. If SeatComfy increases its price by 1%, sales will decrease as well as total revenues. 24. Which of the demand curves depicted below has constant price elasticity? A. All of them. B. None of them. C. (1) and (3). D. (2) and (3). 25. FarAwayDrive Inc. has recently increased the price of its golf balls from $4.00 to $6.00. In response to this increase in price, sales decreased from 2,200 to 1,800 units. If no other information concerning the demand is available, which of the following is true about the sensitivity of demand (using the ARC or
Open Document