1. Demand is _________ on the upper portion of a linear demand curve and _________ on the lower portion of a linear demand curve.
2. If Maria spends a fixed dollar amount per week on movie rentals regardless of changes in the price, Maria’s demand for movie rentals can be considered _________ (elastic/unit elastic/inelastic).
3. At the midpoint of a linear demand curve, the price elasticity of demand is _________.
4.If we are on the lower part of a linear demand curve, a decrease in price _________ (increases/decreases) total revenue.
5. Suppose that the elasticity of demand for a product is 0.50. If a firm producing this product increases the price, its total revenue will _________ (increase/ decrease/stay the same).
6. The income elasticity of demand is _________ (positive/ negative) for normal goods and _________ (positive/ negative) for inferior goods.
7.If a 20 percent increase in income increases the quantity of iPods demanded by 30 percent, the income elasticity of demand is _________.
8. The cross-price elasticity of demand is _________ (positive/negative) for substitute goods and _________ (positive/negative) for complementary goods.
9.If the quantity demanded of restaurant meals increases by 20 percent when income increases by 10 percent, the demand for restaurant meals is _________ (price sensitive/income-elastic/income-inelastic).
10.If a 10 percent increase in the price of tennis rackets decreases the quantity of tennis balls demanded by 15 percent, the cross-price elasticity of demand is _________.