Question

9. If the Price of a related good A changes, then for good B stay on the same demand curve, and move along it, as opposed to shifting to a new demand curve.

True or False

10.If the Income Elasticity of deamnd for a good is negative, we can say that the good is normal good.

True or False

11. Own price elasticity of demand is always negative, because of the law of demand.

True or False

12. A firm in a perfectly competitive market, finds that it's MR = MC occurs at Q = 100, at which point the market Price is $8. What is the firm's TR at this point?

a.100

b.8

c.800

d.10.50

Answer 1

9.

False

For solving this question firstly we need to understand the difference between demand and quantity demanded

Quantity demanded changes only with respect to change in price but demand changes when there are other factors more than the price factors are present like income of a consumer, presence of substitute in the market, expectation level of consumers

In the given question, the movement on demand curve occurs when there is change in the quantity demanded not the whole demand

In the given question since the only factor price is not present

So there will be shift in the demand curve not movement

10.

False

Income elasticity of demand is negative then the good is said to be inferior good

Income elasticity of demand is positive then the good is said to be normal good.

11.

True

According to law of demand if other things held constant then price and quantity demanded are related

It means there will be negative sign between the two