If the price elasticity of demand for a product measures .45,
a. this good has many available substitutes.
b. this good must be a nonessential good.
c. this good is a high-priced good.
d. a decrease in price will increase total revenue.
e. this good is demand price inelastic.
Answer: e. this good is demand price inelastic.
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If you exchanged $1,000 for 90,000 yen at your local bank in preparation for an upcoming trip to Tokyo, and notice after your arrival that the current exchange rate is 100 yen per dollar, how will the value of the yen you brought to Tokyo change relative to the dollar?
a) The value of the yen fell in value relative to the dollar. b) The value of the yen rose in value relative to the dollar. c) The value of the yen stayed the same relative to the dollar. d) There is not enough information to answer this question.
Bundling
A) is when firms sell multiple separate goods together for a single price. B) is where a firm wraps its fragile goods in special packaging and charges a higher price than if the goods are put into regular packaging. C) increases transaction costs for consumers. D) is illegal in most U.S. states.