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Questions and Answers
What does the law of demand state?
What does the law of demand state?
- The price remains constant regardless of quantity
- There is a direct relationship between price and quantity
- The quantity demanded is not affected by price changes
- There is an indirect relationship between price and quantity (correct)
Inelastic demand occurs when products:
Inelastic demand occurs when products:
- Are luxuries
- Have very few substitutes (correct)
- Have many substitutes available
- Experience a large change in quantity with a small change in price
What happens to total revenue when demand is inelastic and the price increases?
What happens to total revenue when demand is inelastic and the price increases?
- Total revenue increases (correct)
- Total revenue fluctuates randomly
- Total revenue remains constant
- Total revenue decreases
What does an elasticity coefficient greater than one (>1) indicate?
What does an elasticity coefficient greater than one (>1) indicate?
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Why do gas stations typically not have sales according to the text?
Why do gas stations typically not have sales according to the text?
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How is the concept of elasticity related to the size of the box mentioned in the text?
How is the concept of elasticity related to the size of the box mentioned in the text?
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