Using the simple method, what is the price elasticity of demand of product X as price falls from its current price of $20 to $15? The Quantity rise from 10 to 15
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A firm's product has a price elasticity of demand of -2. A 10% fall in the price of the product will cause which of the following?
A. Sales volume will increase by 20%
B. Total revenue will decrease by 20%.
C. Sales volume will increase by 5%.
D. Total revenue will increase by 20%.
If the demand for a good is price inelastic, which of the following is true?
A. When the price of the good rises, the quantity demanded falls but total expenditure on the goodincreases.
B. When the price of the good rises, the quantity demanded falls and total expenditure on the gooddecreases.
C. When the price of the good rises, the quantity demanded rises and total expenditure on the goodincreases.
D. When the price of the good rises, the quantity demanded falls but total expenditure on the good is unchanged.
Which of the following is most likely to reduce the price elasticity of demand for a product?
A. Increased passage of time since prices changed
B. Greater availability of substitutes
C. High costs to consumer of switching to a substitute product
D. Lower product differentiation
Which THREE of the following are likely to mean that the supply of a product is price elastic?
A. There is a shortage of a raw material needed to make the product.
B. There are high levels of unemployment among workers with the skills required to make the product.
C. The firm making the product has spare capacity in its manufacturing process.
D. It is difficult for the firm to switch resources away from producing alternative products.
E. The firm has high inventory levels of the finished product.
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