The cost of production is a major determinant of consumer demand. Show
b. False Managerial economics is primarily concerned with the market demand for an individual firm's output.
b. False The quantity of a commodity demanded by a consumer is influenced by the price of the commodity.
b. False The demand for an individual firm's output depends on the demand for the industry's output, the number of firms in the industry, and the structure of the industry.
b. False The quantity of a commodity demanded by a consumer is influenced by the number of consumers in the market.
b. False The quantity of a commodity demanded by a consumer is influenced by the prices of related commodities.
b. False The law of demand refers to the relationship between consumer income and the quantity of a commodity demanded per time period.
b. False An increase in price of a commodity will generally lead to a decrease in the quantity of the commodity demanded per time period.
b. False A commodity is referred to as normal if an increase in its price leads to an increase in the quantity of the commodity demanded per time period.
b. False Most goods are normal.
b. False Inferior goods are generally purchased at low levels of income but not at high levels of income.
b. False If an increase in the price of one commodity leads to an increase in demand for a second commodity, then the two commodities are complements.
b. False An individual's demand curve is formulated under the assumption that price is held constant and all other determinants of demand are allowed to vary.
b. False The substitution effect holds that an increase in the price of a commodity will cause an individual to search for substitutes.
b. False The income effect holds that a decrease in the price of a commodity is, in some respects, the same as an increase in income.
b. False A change in the price of a commodity will cause the demand curve for that commodity to shift.
b. False If a decrease in income causes an individual's demand curve for a good to shift to the left, then the good is inferior.
b. False If a good is normal, then both the substitution effect and the income effect cause quantity demanded to change in the same direction.
b. False There is an inverse relationship between the quantity demanded of a commodity and its price.
b. False Butter and bread are substitutes.
b. False A shift in demand is referred to as a change in quantity demanded.
b. False If the independent individual consumer demand curves for a commodity are horizontally summed, the result is the market demand curve for the commodity.
b. False If the consumption decisions of individual consumers are not independent, then the horizontal sum of individual consumer demand curves is the market demand curve for the commodity.
b. False The bandwagon effect refers to the importance of musical backgrounds in TV advertising.
b. False The bandwagon effect tends to make the market demand curve flatter than the horizontal summation of individual demand curves.
b. False The snob effect tends to make the market demand curve flatter than the horizontal summation of individual demand curves.
b. False Monopoly refers to a situation in which there is only one producer of a commodity for which there are many close substitutes.
b. False If the demand for a firm's output is horizontal, then the firm is a perfect competitor.
b. False Oligopoly refers to a type of market organization that is characterized by large number of firms selling a differentiated commodity.
b. False Monopolistic competition is a form of market organization that combines elements of perfect competition and monopoly.
b. False Under every form of market organization except monopolistic competition, the firm faces a downward-sloping demand curve.
b. False If consumers expect the price of a commodity to increase in the future, then demand for the commodity will decrease.
b. False Consumers find it easier to postpone the purchase of a durable good than to postpone the purchase of a nondurable good, so the demand for durable goods is more unstable than the demand for nondurable goods.
b. False Derived demand refers to the mathematical derivation of a market demand curve from individual consumers' demand curves.
b. False Derived demand by a firm will generally increase if the demand for the firm's output increases.
b. False According to the estimated linear demand function presented in Case 3-1, sweet potatoes are normal goods.
b. False Elasticity is a measure that does not depend on the units used to measure prices and quantities.
b. False The price elasticity of demand is the same as the slope of a demand curve.
b. False The arc price elasticity of demand measures the price elasticity at a point on the demand curve.
b. False The price elasticity of demand for a firm's output is generally more elastic than the price elasticity of demand for the industry's output of the commodity.
b. False If price elasticity of demand for a firm's output becomes more elastic, then the firm's marginal revenue will increase.
b. False If a firm increases the price of its product and total revenue increases, then the price elasticity of demand must be less than minus one.
b. False If the price elasticity of demand for a firm's output is inelastic, then a decrease in price will reduce the firm's total revenue.
b. False If the price elasticity of demand for a firm's output is unit elastic, then marginal revenue is equal to zero and total revenue is at a maximum.
b. False If a firm is a perfect competitor, then its marginal revenue is equal to the price of its commodity.
b. False If a firm is not a perfect competitor, then its marginal revenue is greater than the price of its commodity.
b. False An increase in the number of available substitutes for a commodity will decrease the price elasticity of demand for the commodity.
b. False The long-run price elasticity of demand for a commodity is generally greater then the short-run price elasticity of demand for the commodity.
b. False The income elasticity of demand for an inferior good is negative.
b. False For most goods, the income elasticity of demand is negative.
b. False The cross-price elasticity of demand for two goods is negative if the goods are substitutes.
b. False The cross-price elasticity of demand measures the percentage change in the demand for one good that results from a one percent change in the quantity demanded of a second good.
b. False If two goods are very close complements, then the cross-price elasticity of demand between the two goods will be large and negative.
b. False It is likely that the cross-price elasticity of demand between two goods produced by different firms in the same industry will be positive and large.
b. False Estimates of demand elasticities are used by firms to determine optimal operational policies.
b. False If the price elasticity of demand for a firm's output is inelastic, then the firm could increase its revenue by reducing price.
b. False Decreased barriers to international trade have increased the differences in consumer preferences between countries.
b. False The international convergence in tastes has progressed to the point where there are virtually no international differences in consumer preferences.
b. False Improved telecommunication technology has contributed to the globalization of markets.
b. False Middle-class life styles are fundamentally different in different countries.
b. False Electronic commerce currently accounts for no more than 10% of total U.S. retail sales.
b. False About 90% of the total world revenue accounted for by electronic commerce in 1999 involved business-to-business transactions.
b. False The growth of electronic commerce has been limited by the fact that it increases the costs to retailers of executing sales.
b. False Retail firms that have developed electronic commerce distribution channels typically have not maintained their traditional retail outlets.
b. False The ability of consumers to do comparison shopping on the Internet is likely to put pressure on profit margins at the retail level.
b. False Is this statement true or false the elasticity of demand is the same as the slope of the demand curve?Answer: False
The slope of the demand curve shows the change in price associated with a 1 unit change in quantity demanded. The elasticity of demand is the percent change of quantity demanded associated with a 1% change in price.
Is the elasticity of demand is the same as the slope of the demand curve?The correct answer is False
It cannot be equal to the sloping of the demand curve. If the changes in price response are less than the quantity demanded, then it becomes an elastic demand.
Why is elasticity not the same as the slope?The slope is not the same as the elasticity because the demand curve's slope depends upon the changes in P and Q. Whereas the elasticity depends upon the percentage change in P and Q. The only exceptions are the polar cases of completely elastic and inelastic demands.
Is elasticity the same at all points on the demand curve?In this particular case, the elasticity of demand is constant—it is equal to 0.8 at all points on the demand curve. In general, elasticities are not constant. They vary as we move along the demand curve.
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