1. An increase in each of the following factors would normally provide a subsequent increase in demand, except:

a. price of substitute goods

b. level of competitor advertising

c. consumer income level

d. consumer desires for goods and services

e. a and b

2. A price elasticity (ED) of -1.50 indicates that for a _________ increase in price, quantity demanded will __________ by ____________.

a. one percent; increase; 1.50 units

b. one unit; increase; 1.50 units

c. one unit; decrease; 1.50 percent

d. one percent; decrease; 1.50 percent

e. ten percent; increase; fifteen percent

3. Which of the following statements concerning the price elasticity of demand is (are) true?

a. The demand for durable goods tends to be more price elastic than the demand for nondurables.

b. The greater the number of substitute goods, the more prices elastic the demand for the product.

c. The demand for relatively low-priced goods tends to be more price elastic than the demand for expensive items.

d. a and b only

e. a, b, and c

4. Suppose the price of product B, increases from $1 to $1.50. As a result, the quantity demanded of product "A increases from 500 to 600 a month. This indicates that the cross-price elasticity and relationship among the two products.

a. 0.50, Substitutes

b. 0.45, Substitutes

c. 0.45, Complements

d. .50, Complements

e. Products are not related

5. Given the marginal revenue from a product is $15 and the price elasticity of demand is -1.2, what is the price of the product?

a. Not enough Information

b. $8

c. $88

d. $42

e. $68

6. Given the demand function: QD = -10-2.1 P +.62 Y. Where P is price and Y is Income

a. For a 1% increase in price, quantity demanded falls by 2.1%

b. For a 1% decrease in price, quantity demanded increases by 2.72%

c. For a 1% increase in price, quantity demanded increases by .62%.