test 1 Flashcards
Other factors held constant, demand will decrease when incomes decreases and the prices of complements decrease.
True
False
false
If the price of Good X decreases, the effect on a complementary Good Y will be
A decrease in demand
An increase in quantity demanded
An increase in demand
A decrease in quantity demanded
An increase in demand
If the price of Good Y decreases the effect on a complementary Good X will be an increase in quantity demanded
True
False
False
A normal good is one for which
The income elasticity is positive.
the income elasticity exceeds zero but is less than 1
The price elasticity is less than minus one
The price elasticity exceeds zero, but is less than 1.
the income elasticity exceeds zero but is less than 1
If the income elasticity for a good is 0.3, that good is considered as a normal good.
True
False
True
For complementary goods X and Y, a decrease in the the price of Good Y shifts the demand curve for good X to the right.
True
False
True
Assume that the cross elasticity between two goods is -3 (minus 3). An increase in the price of the first good will
cause the demand curve of the second good to shift to the left.
result in an upward movement along the demand curve for the second good.
cause the demand curve of the second good to shift to the right.
result in a downward movement along the demand curve for the second good
cause the demand curve of the second good to shift to the left.
Assume that the cross elasticity between two goods is -3 (minus 3). An increase in the price of the first good will result in a downward movement along the demand curve for the second good.
True
False
False
The price elasticity of demand is defined as the change in Q divided by the change in P.
True
False
False
Managerial economics is concerned primarily with the application of microeconomic analysis for decision making.
True
False
True
Which of the following statements is false.
The income elasticity is greater than 1 for a normal good.
The income elasticity is negative for an inferior good.
None of these statements is false.
The income elasticity is greater for a normal good than for an inferior good.
The income elasticity is greater than 1 for a normal good.
For complementary goods X and Y, which of the following statements is true?
None of the above is true.
The cross elasticity is positive
Am increase in the Py shifts the demand curve for X to the right.
A decrease in Py shifts the demand curve for X to the right.
A decrease in Py shifts the demand curve for X to the right.
When demand is inelastic, an increase in price leads to
None of these is correct
No change in total revenue
a decrease in total revenue
an increase in total revenue
an increase in total revenue
Firms supply goods and services in _____________markets and demand factors of production in ___________markets.
competitive, monopoly
resource, product
product, resource
free, controlled
product, resource
