If the managers of a theater plan to raise ticket prices to increase ticket revenues, then they must believe that demand is
a. elastic
b. inelastic
c. unit elastic
d. perfectly elastic
e. income elastic
QUESTION 2Along a downward-sloping linear demand curve, total revenue is greatest if demand is
a. inelastic
b. elastic
c. inelastic when prices are high
d. elastic when prices are high
e. unit elastic
QUESTION 3The absolute value of the price elasticity of demand at the midpoint of a linear demand curve is always
a. greater than one
b. less than one
c. one
d. zero
e. infinity
QUESTION 4Along a linear demand curve, as the price increases from zero,
a. demand decreases
b. demand increases
c. quantity demanded increases
d. total revenue first increases but eventually decreases
e. total revenue first decreases but eventually increases
QUESTION 5Along a linear demand curve,
a. both the slope and price elasticity are constant
b. the price elasticity is constant, but the slope varies
c. total revenues are constant
d. the slope is constant, but the price elasticity varies
e. total revenues are negative
QUESTION 6One group of people uses New York City subways only during rush hour to travel to and from work. Another group uses them only in midday for leisure activity. If New York City wants to increase transit fares with the smallest possible reduction in revenue, for which group should it increase the fare?
a. The rush-hour group because its demand for subway service is more elastic than that of the midday group.
b. The rush-hour group because its demand for subway service is less elastic than that of the midday group.
c. The midday group because its demand for subway service is more elastic than that of the rush-hour group.
d. The midday group because its demand for subway service is less elastic than that of the rush-hour group.
e. It doesn't matter because both groups have the same elasticity of demand.
QUESTION 7Which of the following describes a situation in which demand must be elastic?
a. Total revenue increases by 15 percent when the price of corndogs rises by 15 percent.
b. Total revenue increases by less than 15 percent when the price of corndogs rises by 15 percent.
c. Total revenue decreases by more than 15 percent when the price of corndogs rises by 15 percent.
d. Total revenue increases by 15 when the price of corndogs rises by 15.
e. Total revenue increases by more than 15 when the price of corndogs rises by 15.
QUESTION 8Which of the following describes a situation in which demand must be inelastic?
a. Total revenue decreases by 10 percent when the price of spats rises by 10 percent.
b. Total revenue decreases by less than 10 percent when the price of spats rises by 10 percent.
c. Total revenue increases by more than 10 percent when the price of spats rises by 10 percent.
d. Total revenue decreases by 10 when the price of spats rises by 10.
e. Total revenue decreases by more than 10 when the price of spats rises by 10.
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