Choose the correct answer for each question and explain why the answer is correct

Section 1: True-False Questions (10 points) 1. When the price of a good rises, total revenue will fall if the good is inelastic in demand. True False 2. If the price of beef goes up by 2% and the quantity supplied increases by %8, the price elasticity of supply is 0.25 . True False 3. As the price of a product decreases the product will become more elastic in demand, assuming that the demand curve for the product is a downward-sloping straight line. True False 4. Cross-price elasticity of demand is positive if the goods are complements. True False 5. When a good is perfectly elastic in demand, the buyers will pay the full tax that is placed on the sellers. True False 6. Ford Mustangs would tend to be more elastic in demand than all cars because there are more substitutes for Ford Mustangs than for cars. True False 7. It is very important for the seller of a good to know whether the good is elastic, unit elastic, or inelastic in demand so that she will know what will happen to total revenue when she changes the price of the good. True False 8. When the price of a good decreases, total revenue will increase if the good is elastic in demand. True False 9. If the percentage change in quantity demanded is greater than the percentage change in price for good X, then the demand for good X is inelastic True False) 10. Demand for gasoline in the short run is more elastic than the demand for gasoline in the long run. True False