Question

A company reduces its price by 7 percent and gains 13 percent more sales. Consequently, the demand for its product is
a. inelastic
b. elastic
c. unitary elastic
d. normal
e. abnormal

2.

Usually, the longer the time period, the _____ the elasticity of demand

a. higher
b. lower
c. the more unitary
d. more complementary
e. less normal

3.

If you are putting products on sale in order to increase sales, which type of products would you feature in the sale?

a. superior products

b. inferior products

c. products with very elastic demand

d. products with very inelastic demand

e. certified products

4.

Products that have high switching costs tend to have

a. costly demand
b. inferior demand
c. elastic demand
d. inelastic demand
e. superior demand
f. unitary elastic demand

5. According to the Law of Supply,

a. It is illegal to sell mislabeled and fraudulent products
b. It is illegal to obtain a product from a seller without paying for it
c. Suppliers will offer the same quantity of product on the market regardless of price
d. The price of the product is the only thing that determines the amount of product offer for sale in the market
e. Sellers will want to sell more product at lower prices, and less product at higher prices
f. Sellers will want to sell more at higher prices, and less at lower prices

6.

Total revenue will increase if price is increased in a market where demand is

a. inferior

b. superior

c. normal

d. elastic

e. inelastic

f. unitary elastic

Answer 1

1) when prices reduce by 7% and still company gains profit means quantity demanded as a result of decrease in price will be more.

And elasticity of demand is more elastic

So, option B is correct.

2) As in the long run, consumer becomes more aware and hence consumer's demand become inelastic

So, option B is correct that is lowers the elasticity

3) when we are putting product on sale, it means we are decreasing the prices of product and hence, I order to maximize profit, we will try to sale for elastic products so that decrease in price would lead to increase in the quantity

So, option C is correct.

4) in the case of high switching cost products, it is clear from its name that the replacement cost or the switching Costs are higher.

Hence, option A is correct that is costly demand

5) according to law of supply, sellers will want to sell more at higher prices and will want to sell less at lower prices.

So option F is correct

6) total revenue increase when price increase means quantity does not change that much. This means the elasticity of demand for suchh product is inelastic.

Hence, option E is correct.