Answer the following statements true (T) or false (F)
1. The demand for necessities and goods that require a small expenditure tends to be price inelastic.
2. If total revenue decreases when a price is decreased, the demand for the commodity is elastic.
3. If the coefficient of elasticity for a commodity is 1.5 and the price of that commodity is raised, total revenue will decrease.
4. The slope of a demand curve is a measure of elasticity.
5. The demand for a fur coat tends to be more price elastic than the demand for automobile tires.
1. TRUE
2. FALSE
3. TRUE
4. FALSE
5. TRUE
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Which of the following models depicts the role of money as affecting only the price level in the short run?
a. The new classical model b. The Keynesian model c. The real business cycle model d. The monetarist model
The market demand for wheat is Q = 100 - 2p + 1pb, where pb is the price of barley. If the price of wheat is $2, the price elasticity of demand
A) equals (-4/46). B) equals (-46). C) equals (-1). D) cannot be calculated without more information.