True or False 1. If the demand curve is a linear function of price, then the price

True or False

 

Transcribed Image Text:

1. If the demand curve is a linear function of price, then the price elasticity of demand is the same at all prices. 2. If the elasticity of demand curve for millet is -0.5 at all prices higher than the current price, we would expect that when bad weather reduces the size of the millet crop, total revenue of millet producers will fall. 3. If the demand curve were plotted on graph paper with logarithmic scales on both axes, then its slope would be the elasticity of demand. 4. Marginal revenue is equal to price if the demand curve is horizontal. 5. If the amount of money that people are willing to spend on a good stays the same when its price doubles, then demand for that good must have a price elasticity of demand smaller in absolute value than one. 6. If the supply is perfectly elastic, then an upward shift of the demand curve will | lead to a higher price and quantity in equilibrium. 7. The amount of a good supplied is independent of the price. If a sales tax is imposed on the good, then the price paid by consumers will not change at all. 8. A fixed factor is a factor of production that is used in fixed proportion to the level of output. 9. The marginal cost curve passes through the minimum point of the average fixed cost curve. 10. The cost function C(y)=10+3y has marginal cost less than average cost for all levels of output. 1. If the demand curve is a linear function of price, then the price elasticity of demand is the same at all prices. 2. If the elasticity of demand curve for millet is -0.5 at all prices higher than the current price, we would expect that when bad weather reduces the size of the millet crop, total revenue of millet producers will fall. 3. If the demand curve were plotted on graph paper with logarithmic scales on both axes, then its slope would be the elasticity of demand. 4. Marginal revenue is equal to price if the demand curve is horizontal. 5. If the amount of money that people are willing to spend on a good stays the same when its price doubles, then demand for that good must have a price elasticity of demand smaller in absolute value than one. 6. If the supply is perfectly elastic, then an upward shift of the demand curve will | lead to a higher price and quantity in equilibrium. 7. The amount of a good supplied is independent of the price. If a sales tax is imposed on the good, then the price paid by consumers will not change at all. 8. A fixed factor is a factor of production that is used in fixed proportion to the level of output. 9. The marginal cost curve passes through the minimum point of the average fixed cost curve. 10. The cost function C(y)=10+3y has marginal cost less than average cost for all levels of output.

Answer rating: 100% (QA)

1 True The price elasticity of demand measures how much an increase in a products price will cause its demand to change A negative price elasticity me... View the full answer