56. Goods with many close substitutes tend to have a. more elastic demands. b. l

Question

56. Goods with many close substitutes tend to have a. more elastic demands. b. less elastic demands. C. price elasticities of demand that are unit elastic. d. income elasticities of demand that are negative. result, the quantity of bags demanded increases from 600 to 800. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is a. 0.35 b. 0.43. c. 2.33 d. 2.89. 57 Suppose the price of a bag of frozen chicken nuggets decreases from $6.50 to $5.75 and, as a 58. Demand is inelastic if the price elasticity of demand is a. less than 1 b. c. greater than 1. d. equal to 1 equal to 0. 0.2 percent decrease in the quantity demanded. 20 percent decrease in the quantity demanded. 59. If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a a. b. 5 percent decrease in the quantity demanded C. d. 40 percent decrease in the quantity demanded. 60. An increase in price causes an increase in total revenue when demand is a. elastic. b. inelastic. c. unit elastic. d. All of the above are possible.

Explanation / Answer

Ans:

56) Option A

more elastic demands

when the demand is elastic the change in the quantity demanded is larger than the change in price. Hence a product with many close substitutes will have elastic demand.

57) Option C

   Price elasticity of demand = 2.33

58) Option A

Less than 1

59) Option C

20 percent decrease in quantity demanded

60) Option B

inelastic.

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