Microeconomics Exam #2 / Comprehensive Practice Test / Study Guide Newest Actual Questions & Answers (A+ Guide Solutions.
Quiz____?Determinants of Price Elasticity of Demand - Answer✓✓ Availability of substitutes, Luxury or Necessity, The share of total budget, time dimension Quiz____?Availability of substitutes - Answer✓✓ greater the number of substitutes, the more ELASTIC the demand, when all firms in a market produce products which are perfect substitutes for each other, the demand is perfectly elastic Quiz____?Luxury or Necessity - Answer✓✓ A product is a luxury will have more elastic demand than a product deemed necessity. Luxury is a product that consumers can easily do without compared to necessity Quiz____?Page 1 of 21 1 / 3
The share of the total budget - Answer✓✓ the larger the proportion of a budget the good constitutes, the more elastic the demand Quiz____?Time dimension - Answer✓✓ the more time the consumer is given to adjust to the price change, the more elastic the demand Quiz____?Total Revenue= - Answer✓✓ =Price*Quantity=P*Q The price of a good being sold multiplied by the number of units sold Quiz____?Relationship between price elasticity and total revenue - Answer✓✓ both calculations use price and quantity, they are directly proportional. All varies on price.Quiz____?Total Revenue decreases... - Answer✓✓ Page 2 of 21 2 / 3
-Elastic (Ed>1) and Price increases -Inelastic (Ed<1) and Price decreases Quiz____?Total Revenue increases... - Answer✓✓ -Elastic (Ed>1) and Price decreases -Inelastic (Ed<1) and Price increases Quiz____?No change in total revenue... - Answer✓✓ -Unit Elastic (Ed=1) Quiz____?Utility - Answer✓✓ the satisfaction associated with the consumption of goods and services Quiz____?Marginal utility - Answer✓✓ the change in total utility divided by the change in quantity consumed Page 3 of 21
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