1. The demand for normal goods

Falls when incomes rise.

Rises when incomes rise.

Rises when incomes fall.

Shifts to the right when incomes fall.

2. Price discrimination works best when

Buyers have information about prices charged to different customers.

Buyers do not have perfect information about the price.

Sellers cannot meet collectively.

A product is purchased frequently by consumers.

3. When demand is inelastic

The product in demand has many substitute goods.

Buyers are very sensitive to changes in price.

The percentage change in price is greater than the percentage change in quantity demanded.

The percentage change in quantity demanded is greater than the percentage change in price.

4. Utility refers to the

Satisfaction obtained from a good or service.

Willingness to buy specific quantities of a good or service at a particular price.

Decrease in satisfaction as more of a good or service is consumed.

Additional satisfaction obtained from one more unit of a good or service.

5. If a price ceiling is to be effective, it should be set

Below the equilibrium price, and it will create a market shortage.

Above the equilibrium price, and it will create a market shortage.

Below the equilibrium price, and it will create a market surplus.

Above the equilibrium price, and it will create a market surplus.

6. In economics, a public good

Is provided in an optimal amount by the market.

Cannot be denied to consumers who have not paid.

Has social costs of production lower than private costs of production.

Is any good produced by the government.

7. The formula for the elasticity of supply is

The percentage change in price divided by the percentage change in quantity demanded.

The percentage change in price divided by the percentage change in quantity supplied.

The percentage change in quantity supplied divided by the percentage change in income.

The percentage change in quantity supplied divided by the percentage change in price.