Reference no: EM132946597

Problem 1: Demand for a product tends to be price INELASTIC if

a. The product is considered a luxury item

b. The population in the market areas is large

c. Few good complements for the product are available

d. People spend a large share of their income on the product

Problem 2: In the pharmaceutical industry where a diabetic must have insulin no matter the cost and where there is no other substitute, the diabetic's demand curve is best described as

a. Perfectly elastic

b. Elastic

c. Perfectly inelastic

d. Inelastic

Problem 3: In which of the following situations would there be ELASTIC demand?

a. A 5% price increase results in a 4% increase in the quantity demanded

b. A 5% price increase results in a 4% decrease in the quantity demanded

c. A 4% price increase results in a 5% increase in the quantity demanded

d. A 4% price increase results in a 5% decrease in the quantity demanded