1. Other things being equal, demand is MORE elastic when a) the good is a luxury

ID: 1098442 • Letter: 1

Question

1. Other things being equal, demand is MORE elastic when

a) the good is a luxury and not a necessity.

b) the good is broadly defined (a hamburger rather than a Big Mac).

c) the item is NOT a large part of your budget.

d) all of the above.

Please explain your answer clearly.

2. Suppose parking fees at SUNY Oswego increase. If demand is relatively elastic then

a) total revenue from parking fees will fall.

b) total revenue from parking fees will rise.

c) total revenue from parking fees is constant.

d) the direction of change in total revenue from parking fees cannot be determined.

Please explain what istotal revenue and how it is affected/what happens

3. The production possibility curve (or frontier) is concave due to:

a) its negative slope.

b) its shifting out over time.

c) increasing opportunity costs.