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1. Price elasticity of demand is calculated as (Points: 1) the percentage change in
quantity demanded divided by the percentage change in price
2. The price elasticity of demand (Points: 1) tells producers what will happen to total
revenue if they change product price
3. Along a linear demand curve, (Points: 1) both the slope and price elasticity are
constant
4. Demand is more elastic (Points: 1) for goods with many substitutes than for goods
with only a few
5. Demand for a necessity, such as food, is (Points: 1) both income and price inelastic
6. The reason economists assume that firms try to maximize economic profit is (Points:
1) firms in the real world always maximize profit
7. Which of the following is a short-run adjustment? (Points: 1) People's Bank hires two
new tellers to meet increased demand for customer services.
8. At the point where diminishing marginal returns set in, the slope of the total product
curve is (Points: 1) positive and decreasing
9. Which of the following correctly describes the relationship between the marginal cost
and average variable cost curves? (Points: 1) MC crosses AVC at AVC's minimum
point
10. The shape of the long-run average cost curve reflects (Points: 1) economies and
diseconomies of scale