Question

1.

Compared to "proprietary" products, "commodity" products usually have

a. more inelastic demand
b. more elastic demand
c. more unitary elastic demand
d. more refined demand
e. a complementary demand

2.

The example in the lecture of restaurant customers being willing to buy more lobster at $30, but less at $15, was meant to show a case where customers used the product’s price as

a. a substitute for another price
b. as a measure of the product’s elasticity
c. as a tax deduction
d. as a measure or gauge of the product’s quality
e. as a measure of the product’s barter value

3.

When the economy grows, the demand for normal goods will

a. Decline

b. Increase, but by a smaller percentage than the increase in income

c. Increase, but by a larger percentage than the increase in income

d.. Not change at all because only price, not income, affects demand

4.

If the economy enters a recession, the demand for inferior goods will

a. Increase more than the decline in income during the recession

b. Increase less than the decline in income during the recession

c. Increase by the same magnitude in the decline in income during the recession

d. Decline

e. Not change at all

5.

What will firms often do if they find a strong complementary relationship between two products?

a. They will usually concentrate on the larger market and largely ignore the smaller market

b. They will usually avoid getting involved in the complement market for fear of an antitrust case

c. They will usually get rid of their interests in the complement market in order to avoid a conflict of interest

d. They will try to form a cartel with complement producers to raise the price of the complement

e. They will often produce the product in order to reduce its price

6. Suppose that Supply increases and Demand increases in a market. What will the new equilibrium look like?
a. The equilibrium price and equilibrium quantity will remain the same (unchanged)
b. The equilibrium price and equilibrium quantity will both increase
c. The equilibrium price and equilibrium quantity will both decline
d. The equilibrium price will increase, and the equilibrium quantity will decline
e. The equilibrium price and decrease, and the equilibrium quantity will increase
f. The equilibrium quantity will increase, but we cannot tell what will happen to the equilibrium price from this data
g. The equilibrium quantity will decrease, but we cannot tell what will happen to the equilibrium price from this data

7.

If the price of a substitute increases, what will happen to the price of our product?

a. It decreases
b. It increases
c. It does not change
d. It changes, but there is no way of telling the direction

Answer 1

1. The correct option is A. Price elasticity of demand, or elasticity, is the degree to which the effective desire for something changes as its price changes. Commodity Product usually have more inelastic demand that is their demands changes very little with respect to their prices.

2. The correct option is B. A measure of the products elasticity.

3. The correct option is B. Increase but by a larger percentage than Increase in income. The demand curve for a normal good shifts out when a consumer's income increases as economy grows.

​​​​​​​​​​​​4. The correct option is A. Increase more than the decline in income during the recession

5. The correct option is D. They will try to form a cartel with complement producers to raise the price of the complement

6. The correct option is F.  The equilibrium quantity will increase, but we cannot tell what will happen to the equilibrium price from this data. This is because we don't know if the demand and supply Increases in the same ratio or more or less than each other.

7. The correct option is C. It does not change. The change in price of substitute will change DEMAND of our product. Not price.

NOTE: I HOPE YOU WILL BE SATISFIED WITH MY ANSWER PLEASE DO PROVIDE RATING. THANK YOU AND HAVE A NICE DAY. :))