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For each of the following claims, please state if it is true, false or uncertain. Provide a brief written justification for your answer (a sentence or two will suffice).

(1) When the price of tomato sauce increases by 5%, the quantity demanded drops by 10%. Then, demand of for tomato sauce is elastic.

(2) Notebooks have an inelastic demand. When the price of notebooks drops by 1%, the quantity demanded demand increases by 2%.

(3) The quantity of coffee demanded drops by 5% after that the price increase by 5%. It means that the demand for coffee is unit elastic.

(4) Demand a farmer's wheat is inelastic. When the price of wheat increases by 20%, the revenue of the farmer increase by 5%.

(5) If my income increases by 10%, then quantity of public transportation demanded drops by 5%. I can say that income elasticity of my demand for public transportation is negative and that public transportation is a normal good.

(6) If the demand for cheese in France is perfectly inelastic, an increase in the price of cheese will reduce the quantity demanded.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M9467672

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