If a 10 percent price increase causes the quantity demanded for a good to decrease by 20 percent, ...

If a 10 percent price increase causes the quantity demanded for a good to decrease by 20 percent, demand is elastic.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 2

A perfectly competitive firm's supply curve follows the upward-sloping segment of its marginal cost curve above the:
 a. average total cost curve.
  b. average variable cost curve.
  c. average fixed curve.
  d. average price curve.

QUESTION 3

If demand is perfectly inelastic, then the demand curve will be vertical.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 4

A perfectly competitive firm's short-run supply curve is the part of its marginal cost curve that is:
 a. upward sloping.
  b. above the minimum level of average variable cost.
  c. above average fixed cost.
  d. both a and b.

QUESTION 5

Price elasticity remains constant along a straight-line demand curve.
 a. True
  b. False
  Indicate whether the statement is true or false