Question 1
With a downward-sloping straight-line demand curve, price elasticity of demand is
◦ constant everywhere on it.
◦ rising continuously with price increases.
◦ decreasing continuously with price increases.
◦ increasing to the midpoint of the curve and then decreasing.
◦ indeterminate.
Question 2
Which of the following statements about price elasticity of demand is true?
◦ It is higher for an entire group of related products than it is for a particular product in that group.
◦ It is a positive number because price and quantity demanded move in the same direction.
◦ It usually increases over time.
◦ It is very small when good substitutes are readily available for the commodity.
◦ It is greater than one if the percentage increase in the commodity's price is greater than the percentage decline in quantity demanded.
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The original Supply and Demand graph
Suppose a country imports televisions. The country's supply and demand curves are shown in ...