1. Most customers want more products than they can afford to buy.
True False
2. Economists usually assume that customers have a fairly definite set of preferences.
True False
3. The "law of diminishing demand" says that if a firm raised the price of its product, a
smaller quantity would be demanded.
True False
4. If a firm lowered the price of its product, the "law of diminishing demand" says that the
quantity demanded would decrease.
True False
5. A "demand schedule" for a television manufacturer would show how many new TVs are to
be produced each month during the current production year.
True False
6. A demand schedule shows the relationship between price and quantity demanded in a
market.
True False
7. A demand curve is a graph of the relationship between price and quantity in a market--
assuming that all other things stay the same.
True False
APP A-1
,Appendix A - Economics Fundamentals
8. Most demand curves are upward-sloping--to the right.
True False
9. If demand is elastic, then total revenue would decrease if price were lowered.
True False
10. If demand is elastic, then total revenue would decrease if price were raised.
True False
11. If demand is inelastic, then total revenue would increase if price were lowered.
True False
12. If demand is inelastic, then total revenue would increase if price were raised.
True False
13. Elasticity of demand is defined in terms of changes in total costs of production.
True False
14. If total revenue remains the same when price is raised or lowered, then we have the
special case of "unitary elasticity of demand."
True False
15. A demand curve cannot be both elastic and inelastic.
True False
APP A-2
, Appendix A - Economics Fundamentals
16. A single demand curve can have both elastic and inelastic parts over different price
ranges.
True False
17. The availability of substitutes is one important factor affecting whether the demand for a
product is elastic or inelastic.
True False
18. When a large number of substitutes are available, demand will tend to be more elastic.
True False
19. When few substitutes are available, demand will tend to be more elastic.
True False
20. Most supply curves slope upward, indicating that suppliers will be willing to offer greater
quantities at higher prices.
True False
21. If supply is elastic, the supply curve will be nearly vertical.
True False
22. The equilibrium point is where the quantity and price that sellers are willing to offer are
greater than the quantity and price that buyers are willing to accept.
True False
23. The equilibrium point is that point at which the quantity demanded would not change if
price were either lowered or raised.
True False
APP A-3
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