If a decrease in the price of movie tickets increases the total revenue of movie theaters, this is evidence that demand is:
a. price elastic.
b. price inelastic.
c. unit elastic with respect to price.
d. perfectly inelastic.
QUESTION 2If demand is price elastic, a decrease in price causes:
a. an increase in total revenue.
b. a decrease in total revenue.
c. no change in total revenue.
d. an increase in quantity, but anything can happen to revenue.
QUESTION 3Price elasticity of demand refers to the:
a. percentage increase in price in response to a percentage increase in quantity demanded.
b. percentage decrease in price in response to a percentage increase in income.
c. minimum amount that consumers will pay for a percentage change in quantity demanded or supplied.
d. responsiveness of quantity demanded to a change in the price of a good.
QUESTION 4Price elasticity of demand is defined as the ratio of the:
a. percentage increase in price to an increase in quantity demanded.
b. unit change in quantity demanded to the dollar change in price.
c. maximum amount that consumers will pay to increase quantity.
d. percentage change in quantity demanded to the percentage change in price, other things being equal.
QUESTION 5Price elasticity of demand refers to the ratio of the:
a. percentage change in price of a good in response to a percentage change in quantity demanded.
b. percentage change in price of a good to a percentage increase in income.
c. percentage change in the quantity demanded of a good to a percentage change in its price.
d. none of these.
QUESTION 6If demand is inelastic, an increase in the price of a good will cause total revenue to:
a. fall.
b. remain constant since the decrease in quantity sold is exactly offset by the price increase.
c. rise.
d. rise if it is a normal good and fall if it is an inferior good.
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